Azerbaijani Investments Should be More Aggressive in Georgia Kakha Bendukidze, the State Minister of Georgia on Reforms Coordination
Exclusive interview with famous Russian businessman, currently Georgian State Minister on Reforms Coordination
Question: How do you assess the future prospects of strengthening the Azerbaijani-Georgian economic relations?
Answer: I think that our countries have excellent prospects. We are neighbors, jointly developing. Possibly, last year Azerbaijan broke the world record for its rate of development. Georgia is developing very rapidly, too.
Question: What role does Azerbaijan play for Georgian economy?
Answer: Azerbaijan is a very important partner for Georgia. If I would be told that Georgia has an opportunity to open only five embassies in the world, then I would open one of them in Azerbaijan. I consider that Azerbaijan also thinks so.
Question: Are you satisfied with level of trade turnover between our Countries?
Answer: I think that the trade turnover between Azerbaijan and Georgia is inadequate and has the potential to be much larger.
Question: What primary directions of cooperation in the non-oil sector need to be realized firstly?
Question: I would not divide our cooperation into an oil and non-oil sector. I think that we need to integrate all areas. The oil sector is of great importance, and as such very important plans, particularly in relation to the oil refinery, are in progress. There is an agreement between both Countries regarding free trade and tax, and therefore merchandise is not charged by either Country, which is very important. As a result, entrepreneurs who establish new partnership relations should actively benefit from it Georgians exports commodities to Azerbaijan and Azerbaijanian entrepreneurs import into Georgia.
Opportunities should be created in both Azerbaijan and Georgia equally so that they are on par with the world market. There are possibilities in Azerbaijan that are unavailable in Georgia, and vice versa, there are several opportunities in our Country that are unavailable in Azerbaijan.
Question: What are priority spheres for mutual investments between Azerbaijan and Georgia? Could you list a series of enterprises that are capable of attracting potential Azerbaijani investors?
Answer: That is the issue for the investors and they need to make a decision. We as the State should create conditions that these processes - economic impact - take place in a more simplified manner and quickly.
Question: How do you assess the situation with regards to economical reforms in Georgia? Are any measures taken to more fully ensure the participation of Georgian Azerbaijanis in this process?
Answer: Over the past two years, significant changes have taken place in the economy of Georgia. In particular, it is related to the issue that the economy has become more open and free. The amount of foreign investments has substantially increased. At the moment, several effective projects are being developed at once, not as in the past when we had just one pipeline. Today we have a large amount of investments in various fields, that materialized without proper State participation. The reforms have importantly simplified the business in Georgia with regards to receiving licenses, export and import opportunities, understandings taxation and clarity privatization. Therefore, privatization, including agricultural lands, is one of the important stages of our reforms.
This ruling was met with organized resistance from a small, but very aggressive group of politicians. One of the problems, they stated, was that the law (The agricultural land privatization law) creates simultaneous opportunities for all Georgian citizens to gain access to land. When the transfer of rights to land property took place, I personally provided the first confirmation to the citizen of Georgia of Azerbaijan origin. It seems to me that ethnic Azerbaijanis living in Georgia should have equal rights with the Georgians for allocation and exploitation of land. This encourages the possibility of developing businesses and engaging in the commerce and construction. We do our best to maximize the economy of Georgia.
Question: How do you assess the level of border trade and what measures are intended for its future regulation?
Answer: It doesnt need to create special regimes of border trade. We should have a simple and transparent customs system. We cannot permit the development of contraband in the form of border trade, which is transported in both directions
Question: What are the prospects of total custom zone creation?
Answer: This is possible, but we should make sure the fiscal administration in the both countries is quite same and VAT taxes are universal in Georgia and Azerbaijan alike. We have achieved the lowest custom fees in history, and creation of a uniform custom space means Azerbaijan should accept the same tariffs. The free trade would be very effective, for example, one delivered some goods to Poti, cleared and transported them to Baku without any further problems with customs. What is called frontier trade is the result of the poor condition of our economies several years ago. Several kilograms of goods delivered through the border in a car are not considered to be a trade. The actual effective trade is a delivery of big amounts of goods, with use of warehouses, wholesale prices and so. As soon as the economy grows larger, the organized trade will commence. The uncoordinated custom fees lead to contraband. For instance, Georgia purchases diesel fuel at global prices, but in Azerbaijan such fuel is three times cheaper. It is clear that it will cause contraband but not frontier trade.
Question: At the moment there are no serious projects only Azeri and Georgian capitals are participating in. Do you see any ways to fix the problem?
Answer: There is not a serious necessity or any limitations for joint ventures setup. I know various facilities and enterprises in Georgia belonging to Azerbaijanis and vice versa. Joint ventures setup is not mandatory. Why is it necessary to create artificial compatibility enterprise? Let them do their own businesses.
Question: Previously Kazakh oil capital was quite aggressive in Georgias investment market. Is Georgia ready to create more attractive investment conditions for similar Azeri capital with account for neighbor relations and close partnership in energy-related projects?
Answer: Kazakh capital has not any special cost. When Azeri capital is formed they will have the same opportunities. Unlike Kazakhstan, the Azeri capital is not very concerned and needs to be more assertive in Georgia.