Huge potential for growth in Qatar-Georgia relations

The fraternal relations between Qatar and Georgia have grown exponentially in the past and there is huge potential for growth in bilateral relations between the two countries, said Natela Turnava, Minister of Economy and Sustainable Development of Georgia. In an exclusive interview with The Peninsula, the Minister shared her thoughts on boosting bilateral investment and trade, increasing tourism and bringing the countries further close. 

Rising trade and investment volume and a sharp rise in tourist inflows endorse the strength of ties between the two countries. 

“In recent years we have further expanded bilateral trade and economic cooperation and the process is still in progress. First investments from Qatar to Georgia were carried out in 2013. In 2013-2018, investments from Qatar amounted to $27.2m and in the two quarters of 2019, investments amounted to $3.81m,” she said.  

Transport and real estate are the sectors where major investment has been done.

According to the minister, great examples of fruitful cooperation between two countries include the successful conclusion of negotiations on the agreement and Promotion and Reciprocal Protection of Investments between Georgia and Qatar as well as on the agreement on Economic, Trade and Technical Cooperation between Georgia and Qatar. 

“Desiring to enhance our bilateral trade and economic ties, I have invited the Minister of Commerce and Industry of Qatar H E Ali bin Ahmed Al Kuwari to visit Georgia at the time of his convenience, in the second half of the year,” Turnava said. 

This visit will be an excellent opportunity to discuss the range of issues of bilateral cooperation and most importantly, to sign the above-mentioned agreements, which will enhance existing international legal framework and create a legal base for intensifying investment and trade flows between our countries.

“In recent years, we have observed positive shifts in trade dynamics, nevertheless, our bilateral trade relations are further below our countries` potential,” she said.  

In 2018, trade turnover amounted to $3.65m, which represents 84% growth compared to the previous year. According to the recent indicators of 2019 (in eight months), the trade turnover has also increased by 27% and amounted to $2.65m, out of which, Georgia’s export to Qatar amounted to $0.87m showing growth of 1% compared to the same period of the previous year. Georgia’s major export product to Qatar is live sheep.  
Some of the Georgian agricultural products, as well as medicaments, have already been exported to Qatar but the volume is quite low. 

“We have a potential to further increase the export on those products, which include: medicaments, live sheep and sheepmeat, mineral waters, non-alcoholic beverages, fruit and vegetable juices, honey, spices, preserved, as well as fresh fruits and vegetables,” Turnava said. 

Government of Georgia has created various mechanisms for trade support and promotion, he said. LEPL Enterprise Georgia under the Ministry of Economy and Sustainable Development of Georgia is working towards organizing trade missions, business forums, fairs for the purpose of supporting bilateral cooperation between entrepreneurs, as well as information provision on export possibilities of Georgian manufacturers to the proper side. 

“With those and other supporting mechanisms we are constantly trying to deepen cooperation in the field of trade and Qatar is one of our priority destinations,” she said. 

In 2018, six Georgian companies with the support and co-financing of Enterprise Georgia participated in international food and beverages exhibition AGRITEQ QATAR 2018. 

“We are always welcome to receive information regarding such exhibitions as it is one of the major possibilities to connect entrepreneurs of two countries with each other,” he said. 

Qatar’s investment in Georgia has increased significantly in the recent past.

“We are very pleased that Qatar investments in Georgia are gradually increasing. In recent periods, Georgia has received about $31m Qatari investments in various sectors of the economy (2013-2019).  I would like to emphasize the implementation of the joint venture real estate project ‘Landmark Tbilisi’, which entails an investment of more than $55m and is the largest single investment from Qatar to Georgia to date. Certainly, there is room for much more investments from Qatar,” Turnava said. 

Apart from trade and investment, tourism between the two countries has got a big boost, helped by visa on arrival facility offered by Georgia for residents of Qatar.

“We are pleased to observe an increasing number of arrivals from Qatar over the past years. Namely, in the period of January-September 2019, visitors from Qatar exceed 2,900, showing a 25.6% growth compared to the same period of the previous year,” she said. 

It is worth highlighting that during 2018, Georgia received 8.7 million international travellers’ trips with international receipts from tourism exceeding $3.2bn (up 7.6 % of the national GDP). 

“Qatar represents one of the strategic and growing tourist markets for Georgia and we aim to further raise awareness on tourist products and offerings of our country in Qatar. To this point, during August-December 2019, we conduct online marketing campaigns on such famous platforms as CNN and Bloomberg in Qatar and organises press-tours for the representatives of the leading media from Qatar on a regular basis,” she said.   During the current year, an article about Georgia’s tourism offerings and a promotional page is provided in the in-flight magazine of Qatar Airways. 

“We plan to continue the conduction of promotional activities in Qatar in the future as well. Moreover, we aim to further diversify tourism markets and increase the share of travellers from Europe, Asia, and Middle East regions,” Turnava added.

In recent years Georgia has undergone significant transformation in terms of establishment of a country based on the European principles of democracy, rule of law, and free-market economy. Today Georgia is a one of the leading countries in terms of attractive investment environment that is mainly caused by implemented reforms and significantly improved business environment in recent years. 

“Georgia is considered as politically stable, transparent and an essentially corruption-free investment destination. Minimum bureaucracy, communication efficiency and low tax burden are among factors that create our favorable investment environment.  Our rule of law is strong and constantly improving: any business disputes are settled fairly without government interference,” she added.

“Today, according to the World Bank, we are one of the easiest countries in the world to do business in. We have eradicated corruption and you will never be asked to pay a bribe. We are the third-lowest tax burden country in the world. We increased the demand market through free trade agreements with countries, having more than one-third of the world population,” Turnava said.

All the aforementioned have transformed Georgia into a new regional hub for doing business, she added. 

Georgia’s business-friendly policies, strong regional and oversea trade relations and geopolitical location have transformed the country into the new regional frontier for investment opportunities.  Considering that, Georgia can be a unique place as an intermediary link for processing and manufacturing of goods bound to Europe as well as to Asia. As well, Georgia is uniquely positioned to provide Business Processes Outsourcing services to any country from Europe to Central Asia. “We have young, well educated, skilled and competitively priced labour force, thus creates favourable conditions for companies to develop their activities in our country,” she said. 

“We are a small but very attractive country for international investments with an open market, liberal economy and strategic location. Georgia has free trade with EU, EFTA, CIS countries, China and Turkey,” she said.  

Macroeconomic stability, together with institutional strength and economic growth-oriented reforms, creates a solid background for further improvement of the investment environment.  Government of Georgia is actively working on the creation of a fair and transparent business environment, which will ensure equal opportunities for both, foreign and domestic companies and foster competition. 

The Minister said that Georgia has successfully implemented tax policy and reforms, reflected in lower tax burden for business and according to “doing business” we are the third lowest tax burden country in the world - total tax rate (per cent of commercial profits) amounts to 9.9% and remains one of the lowest in the world. Only six taxes with streamlined regulations make our country investment heaven where is not any restrictions on currency convertibility or repatriation of capital & profit. Herewith, Georgia has double taxation avoidance treaties with 56 countries. 

Georgia represents the open economy where free movement of capital, goods and services is fully ensured. According to Heritage Foundation’s “Economic Freedom Index”, Georgia is on the 16th place in the world and represents the country with the freest group status.  

“In regard to ease of doing business, Georgia is one of the leading countries globally. According to Doing Business 2020 Georgia ranks seventh worldwide and takes the first position in ECA region,” she said. “Georgia offers investment opportunities in different attractive sectors, including hospitality and real estate, manufacturing, logistics, energy, IT and business process outsourcing, etc,” she added.

Georgia has a variety of business opportunities to offer to those who seek new investment destinations, across a range of the country’s fastest-growing sectors, including renewable energy, hospitality and real estate, manufacturing, business process outsourcing, logistics and more.

“When we speak to investors, we always highlight that Georgia has a very remarkable combination of all major FDI prerequisites. It can offer stability – through predictable political setting, the rule of law and solid financial sector. It can offer flexibility through its simplified procedures for starting a business, buying and handling movable and immovable property and so on,” Turnava said. 

Investors can take advantage of Georgia’s access to 2.3 billion consumer market through its solid FTA network which, amongst others, includes both EU and China. Georgia can also offer global businesses competitive costs for operating business – as it has one of the lowest tax rates globally, competitive wage and utility costs in the wider region. 

And last but certainly not least, Georgia is a country full of young, dynamic and skilled people and generally a very beautiful, exciting and safe country not only for doing business but also to work and live in. That’s why my government’s strategy is to turn Georgia into a centre of the region in the fields of business, trade, finance, logistics, tourism and education. 

Talking about the most promising sectors in the Georgian economy where Qatari investors can explore opportunities, he said that in 2018 and 2019, positive growth tendencies were observed in almost every sector of the economy. In this period, the main growth driver sectors economy were:  real estate, trade, transport and hotels and restaurants sectors.  As well, in recent years, tourism has become one of the fastest-growing sectors of the economy. 

“Enhancement of productivity, export diversification and effective utilization of county’s economic advantages represent the main challenges that we should address in the medium term, thus will enable structural improvement of the economy and boosting the economic growth of the country. In this regard, manufacturing, energy and transport sectors have significant potential of growth,” Turnava said.  

Government of Georgia aims to increase productivity in the economy, through attracting foreign direct investments, especially in the real sector. Consequently, we see the further potential of the development of Energy and Manufacturing. As well, Georgia’s business-friendly policies, strong regional and oversea trade relations and geopolitical location have transformed the country into the new regional frontier for investment opportunities. Considering that, Georgia can be a unique place as an intermediary link for processing and manufacturing of goods bound to Europe as well as to Asia. 

Besides, the Government of Georgia also attaches particular importance to the full realization of Georgia’s transit potential. Georgia is actively involved in various international projects that intend to develop new transport corridors/routes and investing in the transport infrastructure.

“Hospitality & real estate, manufacturing, BPO, energy, and logistics – these are top attractive investment sectors in Georgia right now and we believe for next medium-to-long periods,” she said. 

Hospitality is one of the fastest-growing sectors of Georgia’s economy.  Just a few years ago, in 2010 we were receiving only 2 million international visitors, but in 2018 we reached a record high of 7.9 million visitors. According to the Georgian Tourism Development Strategy inflow of visitors will reach 11 million by 2025 and this growing number of visitors generates a steady demand for industry development.

According to the minister, one of the top priority sectors for the Georgian Government is transport and logistics, since it represents the lifeblood of any country’s economy. The current situation with the Belt and Road Initiative has once again strengthened Georgia’s strategic location. The alternative route through Georgia takes 10-15 days from China to Europe instead of 45 days of the traditional route.

“Energy resources are a key driver of economic development and regional integration.  The Georgian energy sector itself is increasingly attractive for foreign investment and is full of opportunities,” Turnava said. 

“Specifically, we have a great untapped potential in renewable energy and a steadily increasing consumption.  Georgia is among top countries in terms of water resources per capita, only 20% is utilized, and 78% of the total electricity is generated from HPP’s,” she added.

Manufacturing is also a key sector of the Georgian economy, which contributes about 16.4% to national GDP. Georgia offers competitive utility and labor costs, numerous free trade agreements and investment incentives for potential investors in the manufacturing sector and therefore is advantageous for FDI.

Georgia is also fast becoming a new lucrative hotspot for sourcing of services in the changing landscape of BPO industry. More and more clients prefer to transfer their outsourcing tasks to Eastern Europe because of time proximity, geographical affinity and cultural concurrence. This is where Georgia rises as a new competitive destination.

He said that Georgia is not only a famous tourist destination but is also a major investment hub.

“Georgia has continuously attracted not only very impactful investments but has also been continuously dubbed as a regional hub for doing business. Moreover, the reasons why Georgia has gained its reputation of a top performer in the region is simple - The country stands out in terms of political and economic stability,” Turnava added. 

“The general strategy that we follow is simple, we put easiness of doing business and export market diversification into focus and into the forefront of the domestic and foreign policy,” she said.

Georgia has consistently conducted a number of reforms and introduced incentives, which enlivened economic life. 

“Nowadays, we try to make very creative reforms in order to attract even more investments in Georgia. For this reason, we are making huge amounts of investments in our infrastructure and education to support tomorrow’s demands of large-scale impact investments,” she said.

“Our economic vision and business climate model is wholly based on being open and advantageous for FDI, maintaining security and predictability of political environment and moving towards the technology-and knowledge-driven economy,” she said.

The economic policy of the Government of Georgia is based on free-market principle, with a special emphasis on private sector development and macroeconomic stability.

Maintaining a stable macroeconomic environment and continuous implementation of economic reforms was reflected in international credit ratings. Moody’s Investors Service has upgraded Georgia’s sovereign credit rating from Ba3 to Ba2. Just as importantly, in February 2019, credit rating agency Fitch has upgraded Georgia’s rating to ‘BB’ from ‘BB-’ with a stable outlook.

“The Message to investors is quite simple and straightforward – Georgia is a great destination for companies from all around the world, whether it’s to enter the Regional market itself, the European market, or the broader Asian markets. It has an Open Door Policy to help foreign and local companies grow in and via Georgia,” she said.

One of Georgia’s main priorities is to play a more active role in the global economy and attention has firmly turned to create an attractive business environment for international companies to succeed in the region.

“For fulfilling this aim, we plan to constantly exchange the information about planned activities (forums, fairs etc) with foreign business circles and organize industry conferences, which would significantly encourage the collaboration between both sides,” Turnava added.