Why does Georgian leasing market fail to develop?

Why does Georgian leasing market fail to develop?
Why does Georgian leasing market fail to develop?

Georgian transport companies fail to withstand competition across the domestic market, and cannot participate in international shipping. As Founder of the Transport Corridor Research Center, Paata Tsagareishvili says, a high rate on leasing, established by the banking sector for the market, is the reason.

In his words, subsidiaries of leading banks dominate. The interest rates set by them start at 21%, while the cost of similar services in neighbors, namely in Turkey, does not exceed 5%.

As Tsagareishvili says, Georgian drivers with outdated vehicles cannot go beyond the domestic market.

"The leasing market is crucial for developing the transport market potential. First, it applies to international freight transport. Currently, Georgia mainly uses obsolete Euro-3 vehicles (the so-called trailers), and it failed to replace them with Euro-6 vehicles," Paata Tsagareishvili says.

In his words, the profit of Georgian transport companies is 12% more. Thus, when an entity pays an interest rate (21%), in the first year of operation, it loses about 9-10%.

"Nobody needs losers… Georgian companies are limited domestic and international areas; they fail to compete. Therefore, the government and National Bank should do everything to impose strict regulations on the leasing market," Tsagareishvili said.

As Tsagareishvili says, the interest rate should be 8-10% for the leasing activity to provide results.

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