Diplomatically Speaking: Georgian Ambassador Zaal Gogsadze, Building a ‘Stronger, More Resilient World‘
Georgian Ambassador Zaal Gogsadze
Zaal Gogsadze, Georgia’s Ambassador to Hungary since November 3, 2018, discusses the country’s eye-catching “Corruption Freedom” data, bilateral trade and cultural relations with Hungary, and areas for boosting business.
BBJ: Georgia has been ranked very highly in a World Bank survey on bribery. What do you put this down to?
Zaal Gogsadze: At the end of August 2020, World Bank Enterprise Surveys published new survey data where business owners and top managers in 581 firms in Georgia were interviewed from March 2019 through January 2020. Among 144 states worldwide, Georgia received exceptional recognition in the improvement of the Corruption Freedom Index and has been listed in the top 10 least corrupt countries. The percentage of companies in Georgia that have experienced at least one bribe payment request is only 1.3%. That figure reaches 10% in some European and Central Asian countries, and 12% in higher average income countries.
BBJ: How would you assess Hungarian-Georgian bilateral relations?
ZG: Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó has paid two visits to Georgia during the last nine months (most recently March 11-12 this year). Additionally, Minister of Defense Tibor Benkő visited Georgia last year. During his latest visit, Minister Szijjártó declared full support for Georgia’s aim to file an application for EU membership in 2024. To support integration, Hungary assigned a qualified expert and diplomat to the Ministry of Foreign Affairs of Georgia in 2019. Eximbank expressed readiness to provide a EUR 140 million credit line to advance company relations between our countries. We are preparing for the upcoming fourth session of the Intergovernmental Economic Commission, which will be held in Tbilisi this May. Negotiations regarding an agreement for the promotion and protection of investments are at the final stage and I believe that this will give a new impetus to our business opportunities.
Hungary provides 80 scholarships for Georgian students annually. In 2019, the Georgian Library was officially opened at ELTE university in Budapest. A Georgian language and culture course is also offered at ELTE, while a course on Hungarian language and culture us taught at Tbilisi State University. Next year, we celebrate the 30th anniversary of establishment of diplomatic relations between our countries and we are looking forward to a new chapter in our bilateral cooperation.
BBJ: What are business links like? How much is invested in both directions, and in what sectors?
ZG: When it comes to bilateral economic cooperation, there is a big potential for business opportunities. The pandemic slowed down cooperation, but interest exists on both sides. The most prominent and successful example of Hungarian business in Georgia is Wizz Air. Unfortunately, the pandemic that is hitting international travel and tourism also affected Wizz Air flights to Georgia. Air traffic in Georgia was completely suspended in March 2020. From February, Georgia has started gradual reopening and international flights were resumed. We are looking forward to Wizz Air flights restarting soon. Another good example of cooperation is the pharmaceutical industry, which is very well developed in Hungary.
BBJ: Where do you see potential to grow trade between the two states?
ZG: Agriculture is very promising; Hungarian agricultural products are high quality GMO free products. We are interested in sharing Hungary’s knowledge in this field. Other promising sectors are tourism, food processing, manufacturing, energy sector and connectivity. In the post-pandemic world, business will have new opportunities when people-to-people contacts and direct communication will be restored.
BBJ: Why should a Hungarian or multinational business invest in Georgia?
ZG: In 2014, Georgia signed an Association Agreement with the European Union, which includes a deep and comprehensive free trade agreement (FTA). In 2016, Georgia also signed an agreement with European Free Trade Association countries, giving Georgian products duty free access to the markets of Iceland, Liechtenstein, Norway and Switzerland. Since then, Georgia has concluded FTAs with the People’s Republic of China (including Hong Kong) and most recently with the United Kingdom, which came into force in January 2021. Additionally, Georgia has FTAs with Belarus, Kazakhstan, Russia, Turkmenistan, Ukraine, and Uzbekistan, as well as our neighbors, Turkey, Azerbaijan and Armenia. As a result, Georgia provides duty-free access to a 2.3 billion-person market. This trend is ever expanding, with general schemes of preference for Georgia being applied by Canada, Japan and the United States, resulting in lower tariffs on 3,400 goods exported from the country. A proposed series of FTAs with Israel, India and America are also under development. Being a major regional transit hub, Georgia offers significant distribution channels and opportunities through newly renovated and expanded transportation infrastructure, which includes upgraded highways, international railway lines (connecting China and Turkey), a seaport network and three international airports, Tbilisi, Batumi and Kutaisi.
The country has low utility costs, competitive salaries and one of the lowest tax rates, which make it one of the most cost effective locations in Europe and the wider region. Over 75% of electricity is generated from hydro and wind, making it not only cheap but also green. Since 2017, corporate profit tax on reinvested profit is 0% and the social security contribution is 2%. According to the World Bank Group, Georgia’s stripped-down tax scheme has produced the third lowest overall tax rates in the world. Furthermore, the country has four free industrial zones, offering additional tax incentives.
The country ranks seventh in the World Bank’s Ease of Doing Business index in 2020. Starting a business or registering a property takes hours only and can be done by visiting a single location. The Trace International Matrix 2020 ranks Georgia first in terms of the least need to interact with government while doing business.
BBJ: Finally, what impact is COVID-19 having on life in Georgia right now?
ZG: Now the vaccination process is underway, restrictions are being lifted gradually and we are preparing for the upcoming summer season. Tourism is a very important sector of our economy and Georgia has opted to lift restrictions for fully vaccinated travelers from any country. All visitors who have received two doses of COVID-19 vaccine are permitted to enter the country without a need to present a negative PCR test. Non-vaccinated travelers must present a negative PCR test result taken within 72 hours of travel and are required to take a second test at their own expense on the third day of their stay.
The International Monetary Fund updated its World Economic Outlook in April 2021. According to the forecast, the Georgian economy will grow only by 3.5% in 2021, 5.8% in 2022 and 5.5% in 2023. The government will present a 10-year development plan in May, which will convey its vision of how to emerge from the coronavirus crisis. We must believe in science and do our part to protect each other. United, we will overcome this crisis and build a stronger and more resilient world.
This article was first published in the Budapest Business Journal print issue of April 23, 2021.
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