April, 2011 Institute of World Policy (Kyiv, Ukraine)
«Ukraine - Georgia»
Despite the fact that the Georgian-Ukrainian economic relations are developing successfully with each passing year, until recently there had been no single organization providing an opportunity for representatives of business circles of Ukraine and Georgia to share their experiences of doing business, discuss new projects, and in fact, strengthen economic cooperation.
To change this situation, solving the formidable task of improving communication between the business elites in both countries, is the ambitious goal of the founders of the Georgian-Ukrainian Business Club, the first association of businessmen from two countries, aimed at promoting and developing economic and cultural ties between Ukraine and Georgia.
About the idea of the club, as well as about the peculiarities of «doing business» in Georgia, we are talking with Victor Kipiani, Partner of the law firm Mgaloblishvili Kipiani Dzidziguri, a member of the initiative group for the creation of Georgian-Ukrainian Business Club.
Mr. Kipiani, how did the idea of Georgian-Ukrainian Business Club come into being?
Victor Kipiani: Honestly, it's hard to say why and when we came up with this idea, but it has developed by itself. Good ideas usually emerge without any special training. If something is natural, the idea enters the mind and the spin up just as naturally. That is how the idea of the Georgian-Ukrainian Business Club come to us.
Perhaps I should start with the fact that my firm (Mgaloblishvili Kipiani Dzidziguri " - ed.) came up with the project back in 2008, so the idea has not emerged just few months ago. By that time we have had established strong and long-going business contacts with the large number of the Ukrainian companies.
Our company announced the idea of establishing such a union publicly and began looking for those who could also be interested. Surprising is that, that despite some emotional closeness of our countries and our peoples, the association of such kind did not exist, though it was logical, considering the dynamics of our relations.
Soon we had a response from some companies cooperating with representatives of Ukraine, which also joined our project.
Active support was provided by the Embassy of Ukraine in Georgia, which was deeply interest in the establishment of such association. Of course, the Embassy of Georgia in Ukraine contributed to the project as well. All that went after was a usual routine process of establishment and registration of non-governmental organization.
Presentation of the Club was held on March, 25 and today's stage is a stern test of the viability of our project. Nevertheless, the encouraging sign is the certain positive background of the Georgian-Ukrainian relations. For example, any time I visit Ukraine, I have no sense of tension or anxiety. A word ‘Ukraine’ in Georgia is always associated with something pleasant. Despite the fact that the authorities are changing at the one and the other side, the spirit of partnership, cooperation and friendship always remains. According to recent opinion poll, the Georgians consider Ukraine "friend number one" of Georgia, and I am more than convinced that this is the truth.
Thus, I am convinced that there are all prerequisites and preconditions for the Georgian-Ukrainian Business Club not to be just a formal idea on paper. Of course, our capabilities and resources are limited, so do not expect that our club will be able to compete with the American Chamber of Commerce.
However, except enthusiasm the success of this initiative depends largely on the degree of involvement of the Ukrainian side. Comparing the Georgian and Ukrainian markets, we may see that the functional support and participation of partners from Ukraine is really needed. I mean not only the representatives of business but also cultural societies and public organizations as well. Actually, I mean all, who are interested in the relations between our countries.
Speaking about the functional support from the Ukrainian side, which Ukrainian companies are already members of the Club, and which of them do you expect to see join in the nearest future?
Currently members of the Club are BG Capital, Penta, HRG, BDO, Aerosvіt, Rakia, PSP, McDonalds and our company ("Mgaloblishvili Kipiani Dzidziguri). Also we expect one Ukrainian telecommunication company to confirm its participation in the project.
In the nearest future the company Knauf is also going to join us. This is a German company, which has a regional office in Kiev. In addition, the desire to become members of the Club expressed several Georgian companies wine producers.
Thus, the number of members is gradually increasing. We do not set a goal to achieve a particular number, say 20 or 30 members. Our organization is open, and the more companies join us, the better.
Nevertheless, we decided to launch the project not to delay the entire process. As I mentioned, the presentation of the Club took place successfully on March, 25 in Tbilisi. It was attended by the representatives from various companies, chambers of commerce operating in Georgia, as well as diplomats, including officials of the Embassy of Ukraine in Georgia.
Also one may see many representatives of the state institutions of Georgia, in particular the Ministry of Economy. So our idea is interesting not only to businessmen.
It is worth mentioning that the presentation took place without too much pathos or formalities. Actually, that is what we intended to emphasize in our name, avoiding the formality of such definitions like Chamber or the Association.
Club means first and foremost free communication, live communication and common interests.
Recently Ukrainian businessman Igor Kolomoisky has invested much into the tourism sector of Georgia. Is his company going to join you?
Representatives of the “Privat” Group attended a presentation of the Club and we conducted talks with them regarding membership in our association. At this stage they are in the process of decision making. Of course, we would like to see the group "Privat" in our ranks, as it is the largest company represented in our country. The remaining business relations are mainly about export-import. Activities of such companies like UIA's flights and Aerosvіt are related with indirect investments. But the "Privat" Group is the largest business Ukrainian corporation, represented in Georgia. We were unable to find the companies of the same level. In other words, despite the fact that the business relations between our two countries are actively developing, Ukrainian business, though largely believed, is not widely represented in the Georgian market, as it could be expected.
How would you, please, describe the behaviour of the Ukrainian business in Georgia, where the pervasive corruption has been eradicated? Are the Ukrainian entrepreneurs trying to play according to the "Ukrainian rules”, using the old habit to give bribes?
You know, an objective reality in Georgia is such that even if someone had a desire to give bribe, there would be no way to realize it. In other words, there are no objective reasons for entrepreneurs to behave that way. However, I am more than confident that all business people, including representatives of Ukraine, subconsciously like the current situation in Georgia. On this basis, if the situation itself suggests the better, why should we chose the worse?
Yes, it is extremely difficult in our country to give a bribe. Undoubtedly, this fact is interesting, because what happened in Georgia, namely the withdrawal of the Soviet system, clearly shows that nothing is impossible. Such success can be achieved in other countries, with the same Soviet legacy. Certainly Georgia is not comparable to Ukraine with its 50-million populations, but something must go first.
I do not exclude that bringing the example of the positive experience of Georgia too often is now perceived with a backlash in Ukraine. However, it should not be irritating, nobody argues that we are the best, and you're worse. No, in no way. Our experience is just a confirmation that nothing is impossible.
What in Ukraine can attract Georgian business? What industries are, in your opinion, the most promising in business relations between our countries?
Ukraine is interested primarily in terms of sales of Georgian products. I do not think that the acquisition of Ukrainian enterprises is on the agenda of the Georgian business. Our country does not have such capabilities and resources. Therefore Ukraine is primarily interesting for us as a market, and I do not see anything wrong in this. We have such a potential, and it must be admitted.
In Georgia the most attractive field r side is energy. This is primarily hydroresources, 70% of which has not yet been used. This market has already attracted Turkey: Turkish companies are very actively engaged in exploring possibilities in this field. I do not know, are there any prospects for the involvement of the Ukrainian companies in our energy sector, but this is one of the real areas of cooperation. The second field is, of course, agriculture. Ukraine has vast experience in agriculture, and, I believe that some your companies can successfully cooperate with the Georgian partners. And, of course, one should mention recreation area. You reminded of Igor Kolomoisky investments in the resort Gudauri. I think that soon he may be followed by the other Ukrainian businessmen, as the tourism sector of Georgia is developing very quickly and this is the positive experience. Other possible areas of cooperation… It may be transport and logistics, infrastructural programs. I do not see any reason to mention the banking sector as here Georgia has hardly any potential, which could be of interest to the representatives of Ukraine.
In general, I’d like to assure you that our bilateral relations seem to be promising, which can be profitable for our common interests.