Contracts, Contracts, Contracts
In May of this year, Tbilisi will host the Georgia-UK trade mission. Preparations for the event have already begun. Special Trade Envoy of the UK to Georgia Marc Pritchard has already engaged in talks with government of Georgia to identify the topics and sectors that are of interest to investors.
By the end of 2021 Brexit will be in full swing. The United Kingdom will have finished a transit implementation period and the legislation will be fully separated. After leaving the European Union, Georgia and the UK will have to work on bilateral agreements if they want to maintain their trade and investment ties.
Thus far, it appears that both countries want to carry on with trade and investment relations. In September of last year, PM of Great Britain Teresa May appointed a special trade and investment envoy to Georgia. The first envoy ever to hold to this post is Member of British Parliament Marc Pritchard.
Marc Pritchard has been in Parliament for over twelve years. At different times throughout his career, he was a member of the Council of Europe and UK delegate to NATO Parliamentary Assembly. He has also visited both Iraq and Afghanistan during this time.
In addition to Mr. Pritchard, the UK has 29 trade envoys in 50 countries, including envoys in Georgia’s neighboring countries – Azerbaijan, Turkey and Armenia. It is up to Pritchard to strengthen UK trade and investment ties with Armenia as well.
All 50 countries share several common criteria: they are all developing and the UK has identified significant trade and investment potential within each one. The main goal of Prime Minister May’s special representatives is to intensify investment relations with these countries and maximize bilateral trade.
It has been just a year and Mr. Pritchard is already preparing for the trade mission scheduled for this May. We caught up with him on a recent two-day visit to Tbilisi, which was jam-packed full of meetings with the Ministers of Economy, Infrastructure and Finance, the President of the Central Bank and the Mayors of Batumi and Kutaisi. The private sector was not left out either. The two-day visit embraced meetings with large local businesses and representatives of the banking sector.
This exclusive interview with Forbes Georgia was also included on the agenda.
Welcome to Georgia Mr. Pritchard. Thank you for your time. Let us start from the very beginning: what are some of the trade opportunities that you see between Georgia and UK?
Certainly, financial services and banking are one. Potentially, the UK will help Georgia with capital markets development as well. Of course, the London Stock Exchange is also huge international experience to help countries develop their own capital markets.
What is the significance of the stock exchange and developing Georgia’s capital market?
Banks are very successful on London Stock Exchange. However, if Georgia wants to continue to grow, attract more investment into the country and make sure that all parts of the economy grow, then smaller companies should have the opportunity to raise money on capital markets and grow. In addition, it is an opportunity for the ongoing pension reform in Georgia to see people having the opportunity to invest in the country. Georgia will benefit from raising money from existing companies, new companies and pensions in the future.
Glad that you mentioned pension reform, as it is one of the more contentious topics around here these days. I am curious however, why you support this kind of reform in a country where institutions are still not that strong. The funds allocated may not be safe – isn’t there risk involved in this?
You mention risk and my view is that something needs to be done in Georgia with pension reform – the greater risk is not doing anything. Inaction is a greater risk than action. It is important that the government of Georgia get the right advice from the right people. The city of London, with its pension expertise, can be a good place to start. London being the pension capital of the world and Europe, definitely – is the best place to reach out for advice. As a trade envoy, this is something that I want to facilitate. We hope this will be a part of the trade mission in Georgia this May.
Can you elaborate a little bit more on that?
The trade mission will look at four sectors in particular, but it is not restricted to those four sectors. Financial services, banking and pension reform will be a key part of the trade mission.
My meetings are not meetings for photographs - they are to get results. We are getting closer to achieving those results… getting into more details. Nevertheless, this is a step-by-step process and it is important to take those steps to build understanding and identify the key sectors. We are in the stage of doing this and I hope this will be a great success. There are already many British companies interested – some returning, but most for the first time. This is good news for Georgia and good news for the UK.
Let’s continue with identifying key sectors right now.
The second important part will be center around vocational training and education – particularly in the tourism sector. It is important that Georgia continues to see more and more tourists and that these numbers are sustained over the long term. I think having the right service targets throughout the tourism sector is important – not only in Tbilisi, but in small and large cities like Batumi, Kutaisi and Sighnaghi. Increasing standards will encourage people to visit Georgia not just once, but return to visit again later.
I think the other sector we are looking at potentially is the retail sector, but that is still up for discussion. We launched Bentley recently and Bentley is selling really well in Georgia. We also have Burberry here, Wedgwood, and Monsoon is opening really soon… many retailers are interested in Georgia and those who are here, are very successful. Therefore, we are looking at opportunities in that sector as well. Infrastructure is also a big one. British companies could be interested in getting involved in very important infrastructure developments that are ongoing throughout Georgia – and not only engineering firms, but also consultancy firms, architects of planning firms and environmental consultants…infrastructure will definitely be a key part of the mission.
Are there any specific projects that you are looking at?
There are. And they range from roads to hydropower. That being said, the details are obviously something for future discussion.
Let’s talk about Brexit as well. How should Georgia view Brexit – as an opportunity or a challenge?
Personally, I voted to remain in the EU, but the British people decided to leave. We are a democracy and so we respect the will of the British people. I think there will be opportunities – particularly around bilateral trade agreements – for example, the UK and Georgia. That is something that I am involved with and the British Embassy is involved in deep discussions. This will be dependent on the existing deep and comprehensive free trade agreement that Georgia has with the EU. We remain a member of the EU technically until 2019. There’s likely to be a transitional implementation period, which takes us up to March 2021. We will still be a very active member of the EU, even after Brexit. But as trade and investments are concerned, there’s no reason why the UK can’t do things now in Georgia and continue to do things in Georgia during the implementation transition period when we will be exiting the EU, and when we finally exit to continue to improve and increase trade and investment as well.
Have you already found a model of relations the UK will have with the EU? We know that Reformatics, a consultancy company owned by our former PM Nika Gilauri, is advising the British Parliament on the Association Agreement details that the EU has with Georgia…
I think the bilateral agreement or the Association Agreement will look pretty much the same, but it will have additional benefits for both Georgia and the UK. After Brexit, the UK will have more freedom to negotiate wider areas of the agreement that the DCFTA currently affords for Georgia. Georgia’s trade with the UK after Brexit will be enhanced not diminished. Remember, the UK is leaving the EU, but it is not leaving Europe.
What about Georgia’s recognition in the UK – do investors cognizant of the opportunities that this country can offer them?
Georgia has an excellent Embassy in London. It is a very active embassy team and I think it is important that in such a competitive region that Georgia continues to send its ministers to the UK and receive UK ministers. In fact, I have also been very warmly received as the trade envoy. I think secondly, Georgia needs to continue to be an open and transparent place in which to do business. UK companies need to be confident if they are to invest here that their investment and assets are safe and if there are any disputes there are places of redress such as commercial courts, in order to deal with them, but also to deal with them quickly rather than these issues dragging on for many years. I think it is important that outstanding disputes, such as over the issue of some companies within the Omega group, be dealt with fairly and quickly. This is important in order to send the right signal: that these types of issues are indeed rare, and when they do arise, they are dealt with in a fair and proportionate way. I think that it is great that Georgia is one of the top-ranked places in ease of doing business and of course one of the lower tax economies in Europe as well..
So would you say that rule of law is the main challenge to the competitiveness of Georgia?
Look, I’m not going to be involved in domestic politics. I am a trade envoy to Georgia. Georgia needs to continue its reforms in every area, so both individuals and investors feel confident about their investment, whether that be in the capital markets that coming through or manufacturing and a whole range of areas.
Should Georgia become a member of EU?
That is a matter for the government of Georgia to decide, but I think it would be good for the people of Georgia and there will be huge benefits. I am glad that Georgians can now travel visafree – something that I supported when I was the member of the Council of Europe. On a personal level, as well as a member of the governing body of the UK, I will also support Georgia becoming a full member of the EU. I think Georgia will bring added value to the European family.
In the interview with Forbes Georgia in October you mentioned that “We should not end up with presentations and simple conversations, we rather need very tangible results”. It is 2018; do you see these tangible results coming?
Certainly. And we have more interest in Georgia from the British companies than probably ever before. What the government of Georgia has to do and what the British government needs to do – through the British Embassy and through my position – is get those presentations and conversations into contracts and turn them into tangible results. One of the keys is the decision to award the tender for master planning Anaklia city to a UK company. That is good news. That is also just one example. There are many examples where British companies are doing business in Georgia. This [number] is going to expand and there are a lot more opportunities over the next few months and coming years. However, the key thing is that Georgia continues to be open and transparent and sends the right messages. The country also needs to do the right things as far as legislation is concerned in making sure that it is seen by British investors as not only good place to do business, but also a place where there can be a mutual benefit for the people of Georgia and the people of the UK.
How should we measure the success of the mission? As a former businessman and now a politician, I would say contracts, contracts and contracts.