Every second construction company in Georgia is foreign

TBILISI(BPI)- Forbes Georgia, Grant Thornton and EBIT Group conducted a joint research of the construction market, namely construction companies which are involved in the construction of houses, bridges, highways, tunnels and other infrastructure.

The study showed that  out of 20 largest construction companies, 10 are either completely foreign or are founded by foreigners.

What is the reason for the strengthening of the foreign companies and a gradual reduction in the share of the  local companies?

Chief lawyer of the Association of Infrastructure Builders Teona Kupreishvili explains this by  the terms of tenders announced by state structures which the local companies cannot meet.

“Georgian companies are not  encouraged. The state should develop a sovereign policy that would allow local companies to win tenders. There are local companies both large and small that were involved in many infrastructure projects and have experience and specialists. They should have a chance  to participate in tenders, as they will never gain the necessary experience if do not carry out  large and complex projects, , ”she says.

In Teona Kupreishvili’s words,  the tender conditions should be determined by law and the state should boost the development of local construction companies.

According to expert Zviad Khorguashvili, one of the reasons for the advantages of foreign companies in Georgian state tenders is the lower cost of the carried out  works.

“Today, the construction market is mainly controlled by several large companies close to the authorities,” he explains.

 Khorguashvili believes that it’s bad that the Georgian economy is too dependent on infrastructure projects.

“The amounts allocated for infrastructure are not fully spent. In 11 months of 2019, only 60% of the planned works was completed that proves once again  that the projects are implemented inefficiently, and a significant portion of the amount is spent  in the last months of the year. This fact explains  the presence of the corruption and  inefficiently implemented projects,” the expert notes.

Khorguashvili notes that in 2012 a total of GEL 800 million  was spent on infrastructure projects, in 2019 – 2.1 billion, the main problem is that the infrastructure construction is one of the main sources of economic growth that  in turn, is a sign of  weak economy.

“It cannot be considered  to be healthy that the country’s  economy depends on government spending. All other sectors see a deep decline and the government is forced to increase a volume of infrastructure works to prevent Georgia falling into recession. In the long run, this approach is harmful for the economy, ” Zviad Khorguashvili points out.

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