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Kumsishvili

Dimitri Kumsishvili, deputy prime minister and minister of economy of Georgia, tells Sebastian Shehadi how the country transformed into an open and global economy that boasts a booming tourism industry and vast, but largely untapped, hydro-power resources.

Q: Why has Georgia been a success story over the past five years?

A: The most important has been Georgia’s political vision and, of course, political stability. Georgia is a small country with a very open economy. To be in the global market, our aim is to increase the market that we have. We are only a population of 3.7 million, so if you want to reach the investors, if you want to increase production, manufacturing or services, you need a bigger market.

To have a bigger market you need free trade agreements. Today Georgia has a $2.3bn consumer market under the preferential trade regime – so it’s $500m from the EU, plus Turkey is an additional $400m and $1.4bn from China.

Georgia has overseen economic reforms, which you need to do in your country to boost the economy – a lot of structural reforms to support the economic growth called the ‘Four-pillar reform agenda’. This agenda is about education, infrastructure, economic reforms and upper governance. All the pillars complement each other on how to develop the country.

Q: What is the main economic challenge in Georgia?

A: Georgia is an associated member of the EU, and the EU helps us a lot in our reforms. We have challenges in our country, such as the current account deficit. In 2016, we finalised the 12% current account deficit, which was driven by FDI and covered by FDI, but still, this is a big number. In one year, we decreased the current account deficit by 5 percentage points. In 2017, we finalised the current account deficit to 8%. We had 11% FDI to GDP, which means we had fully covered our current account deficit and exceeded.

Q: What are the main tapped or untapped FDI opportunities?

A: In terms of sectors, the hospitality business is very interesting. I mentioned that we are only a population of 3.7 million and last year we hosted 7.6 million in international visitors, which is double our population size. Our energy sector is very interesting. We are the third country in the world by energy resources – hydro resources. We don’t have gas, we don’t have oil, but we have water. We only utilise 28% of the resources we have. So investment-wise, the hydro-power plants are very attractive in our country. The real estate is very interesting in that direction, as is retail and manufacturing.

Q: Georgia has fought corruption well and, in this sense, is a model for Eastern Europe. How did you do it?

A: We invested in technologies to deal with corruption and there has been a change in culture and mentality. Civil servants are very proud that there’s no corruption.

Q: How would you describe your economic relationship with Russia?

A: Pragmatic. We don’t have any political relations with Russia but our economic relations have become better and better. Russia is not a main source of foreign investment, but we have very good trade with them and the tourists increase daily.

This article is sourced from fDi Magazine
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