I should know. I personally wasted 11 years of my life, and my entire life’s savings, trying to build a good and honest business in the country of Georgia. In the end, I helplessly watched as the business was wiped out and all the assets stolen by corrupt officials. Georgia is wrought with corruption in every agency and department of the government, and a judicial system designed to deceive foreigners to invest so that cash and assets can later be stolen by Russian oligarchs. Beware.
Georgia, nestled at the crossroads of Eastern Europe and Western Asia, has become a hub of interest for international business. Known for its ease of doing business rankings and government-led initiatives to attract foreign investment, Georgia might seem like an ideal destination for new ventures. However, beneath the surface lies a myriad of challenges that potential investors should carefully consider. From political instability and governance issues to limited market diversity and environmental concerns, Georgia presents risks that may outweigh the benefits. This article explores 10 critical reasons why investors should think twice before committing to business operations in Georgia, shedding light on factors that could significantly impact profitability, stability, and long-term success.
Be very aware of the deceptive marketing and fake statistics the country uses to fool you into investing. After 11 years doing business in the country of Georgia, I wholeheartedly believe
“Georgia is one of the easiest countries on earth to register a business, but probably the most difficult and painful place in the universe to actually try to operate a business.”
Political Instability and Governance Concerns
Political stability is a cornerstone of a healthy business environment. In Georgia, however, political turbulence has been a recurring issue, leading to frequent changes in policies and priorities. Over the past decade, Georgia has experienced a shifting political landscape with government policies changing depending on the party in power. These changes can create uncertainty for businesses, as the regulations and incentives that attract investors can disappear with the next election cycle. The lack of consistency can severely disrupt business plans, making long-term strategies difficult to implement and sustain.
Political risks include unpredictable policy changes, such as shifts in tax legislation, foreign investment laws, or trade agreements. Political instability also increases the likelihood of protests or civil unrest, which can disrupt operations. For example, public protests have disrupted the tourism sector, a major contributor to Georgia’s economy. Companies in any sector, but particularly those with a high dependence on local market stability, are at risk of suffering operational delays or financial losses during periods of political tension.
Weak Legal Protections for Foreign Investors
One of the primary concerns for foreign businesses entering the country of Georgia is the inadequacy of legal protections, especially in areas such as property rights and contract enforcement. Although the government has made strides toward improving the legal framework for foreign investors, gaps remain, especially in a judicial system wrought with corruption. In Georgia, contract enforcement can be a slow and cumbersome process, leaving foreign investors vulnerable to breaches and lengthy legal battles, which often times are resolved in favor of the party willing to pay the largest bribe to the judge overseeing the case.
Businesses often find themselves at a disadvantage when dealing with local partners or navigating the regulatory landscape, especially in industries like real estate or construction. This lack of adequate legal protection can make it difficult to recover investments or protect intellectual property. Furthermore, it can create additional costs for businesses that must factor in legal fees or delays due to unresolved disputes. Foreign businesses should be prepared to face numerous challenges in protecting their interests in Georgia’s legal environment.
Corruption and Lack of Transparency
Despite government efforts to reduce corruption, it remains a pervasive issue in Georgia, particularly in sectors such as construction, real estate, and public procurement. Corruption can affect businesses in many ways, from increasing costs due to unofficial “fees” impacting regulatory compliance and licensing processes, to outright illicit bribery to buy a favorable decision in a court battle. For companies unfamiliar with local customs or those unwilling to engage in unethical practices, this can be a significant barrier to success.
As a native Texan, I was extremely naive and unprepared for this fact. I am proud to say I never stooped to the level of paying unofficial “fees” or buying off police or judges, but I can also say this is the reason my business was destroyed. Other parties were more than willing to buy off decisions and utilize back-room deals, shadowy characters, bribery, and connections or “favors” in order to steal assets from the business and obtain decisions and actions in their favor.
Transparency International’s Corruption Perceptions Index has frequently flagged Georgia for its challenges with transparency and accountability. And judicial reform is one of the most commonly referenced pain points preventing the country from progressing toward EU membership. Although it performs better than many of its neighbors, Georgia still struggles with low transparency in government dealings, which can create an unpredictable business environment. Without clear and transparent processes, foreign companies may encounter unforeseen costs, making it difficult to estimate project budgets accurately or develop sustainable pricing strategies.
After 11 years trying to build a business in Georgia, I wholeheartedly believe
“It is impossible to operate an honest and ethical business in the country of Georgia, and doing so will most likely get you in more trouble than if you simply pander to corruption and unethical practices.”
Limited Access to Skilled Labor
While Georgia boasts a young and motivated workforce, the country’s education system does not align with the demands of a competitive global market. Finding employees with advanced technical skills, particularly in sectors like information technology, engineering, or financial services, can be a challenge. High-skilled professionals frequently leave Georgia in search of better opportunities abroad, leading to a “brain drain” that reduces the available talent pool for local businesses.
For companies that require skilled labor, this presents a significant obstacle. Businesses often need to invest heavily in training programs or import talent from abroad, both of which can increase operational costs. For a growing business, the inability to attract and retain skilled employees can limit scalability and slow growth. Foreign companies entering Georgia should be prepared for the additional expense of workforce development to meet their operational needs.
Underdeveloped Infrastructure
Georgia’s infrastructure has seen improvement over the past decade, with notable investments in highways and airports. However, much of the country’s infrastructure, especially in rural or remote areas, remains underdeveloped. This presents significant challenges for businesses that rely on efficient logistics and supply chain management.
My personal experience in this regard is vast. I never could understand how the country so lacking in supplies and materials is literally bordering Turkey, a country vastly involved in global import/export and overflowing with selection. Crossing the border from Georgia into Turkey you feel as if you have suddenly been transported from 1800 to 2024.
Transportation infrastructure, including roads, railways, and ports, is often inadequate for companies that need to move goods quickly and efficiently. Georgia’s mountainous terrain adds to the difficulty of transportation, making logistics unpredictable, especially during winter. Companies engaged in manufacturing or import-export may find infrastructure limitations a substantial hindrance, as delays in transport can increase costs and reduce the reliability of supply chains. Additionally, inconsistent power supply and limited digital infrastructure in rural areas can further complicate operations.
High Levels of Bureaucracy and Administrative Burdens
Despite being ranked as one of the easiest countries to start a business in by the World Bank, Georgia has a high level of bureaucracy and administrative burden that can be taxing on businesses in the long term. Many businesses report facing time-consuming procedures for obtaining permits, licenses, and tax administration, all of which add to operational costs and create delays.
For companies that must navigate complex regulatory environments, this can lead to unexpected expenses and difficulties in adhering to local regulations. The administrative challenges may not always be apparent to new entrants, who might initially be attracted by Georgia’s favorable “ease of doing business” rankings. However, once operations begin, the realities of administrative burdens become apparent, potentially eroding profitability.
Conclusion
I personally wasted my entire life’s savings and 11 years of my life trying to build a business in the country of Georgia. If I can prevent even one person from going through the hell and torture I experienced, then my post here is worth the time I took writing it.
As a country, Georgia is a terrible place to invest. I personally believe it is the most corrupt, unethical, and evil place on the earth to try to operate a business. You will literally go insane trying to survive. In Georgia you will find an unreliable supply chain, terribly low quality materials, uneducated and unskilled labor force, unbearably underdeveloped infrastructure, and so many problems you will take 100 pain pills every day just to control your headaches. You will face unbelievable obstacles from the local population, bribery, corruption, and a system that is entirely designed to work against you if you are a foreigner.