Invest In Georgia

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Presentation Georgian Investment resources

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  • 1. WHY TO INVEST IN GEORGIA PRESENTATION 2012 year TBILISI/GEORGIA
  • 2. Georgia Profile /Government & Economy GOVERNMENT Georgia is a democratic Presidential-Parliamentary republic, with the President as the Head of State, and Prime Minister as the Head ofGovernment. Since gaining independence from the former Soviet Union, Georgia has opened up its country and its economy to the world for thelast 15 years. Today, one of the governments core economic policies involves developing the business climate to facilitate investment, integratingwith international markets and attracting foreign investment. By undertaking numerous economic reform initiatives and ensuring a strong legal system to protect investor rights, Georgia has positioned itselfas an attractive destination for foreign investment. Reform Successes:2011 – "Worlds Top Reformer Over the Past 5 Years", the World Bank & IFC Doing Business Report2011 – Ranked 16th out of 183 economies, World Bank & IFC Doing Business Report2011 – Standard and Poors Ratings, B+2011 – Fitch Ratings, B+2010 – Index of Economic Freedom (Heritage Foundation), 29th place: “Mostly Free”2010 – Bertelsmann Transformation (Bertelsmann Foundation) – 42nd place2010 – Corruption Perception Index (Transparency International) – 68th place2008 – 4th Friendliest Tax Regime Globally, the Forbes Tax Misery & Reform IndexECONOMYAs a bridge between Europe and Asia, Georgia economy is highly integrated with international markets. As a Regional Headquarters forinternational firms, Georgia provides direct access to more than 1 billion consumers.Georgia government has implemented sweeping reforms since 2004 to offer a Liberal Tax System and a Business-Friendly Environment topotential investors. Georgia pro-business legislation and liberal labor law have contributed to trade liberalization and a significant growth in localproduction and exports. In 2007, Georgia 4-Year Average GDP growth was 10.5% and Foreign Investment was over USD 2 Billion.This economic growth and increased international investment has created many social benefits, including increased education and employmentopportunities, more specialized trades, expanded access to capital and international business standards. Despite recent decreases in economic growth rates due to the global financial crisis, Georgia real GDP growth rate was 6.4% in 2010.
  • 3. Trade Policies In 2010, Georgias total international trade turnover was USD 6.7 Billion, an increase of 199% since 2005. This success can becontributed to Georgias more active role in the global economy and its steady growth in FDI since 2004.To protect investors and to enhance Georgias role as an investment destination, it has established bilateral treaties oninvestment promotion and protection with 32 countries and has concluded double taxation treaties with 31 countries across theglobe.Georgias Customs Code is on par with European standards and has streamlined its Customs procedures to simplify the importand export process. Highlights of the Customs tariffs are:Low import tariffs (90% of goods are free from import tariff)Few export/import licenses and permitsNo quantitative restrictions on import and exportNo customs tariff on export and re-exportNo VAT on exportSimplified export and import proceduresCompetitive Trade Regimes – HighlightsFree Trade Regime – with CIS countries and Turkey (since November 1, 2008)Most Favored Nation Regime (MFN) – with World Trade Organization (WTO) member countriesPreferential Regime (GSP) – with USA, Canada, Japan, Switzerland, NorwayPreferential Regime (GSP+) – with EU (7200 products duty free)Possibility of FTA with EU in nearest future
  • 4. Visa Information for Foreign CitizensForeign citizens visiting or working in Georgia may be required to obtain a visa before entry to the country. Diplomatic, service, temporary andpermanent visas are available, depending on the nature and length of stay in Georgia. Citizens of the following countries do not need a visa to enter and stay in Georgia for 360 days:European Union - All Kingdom of Bahrain Saudi Arabia Antigua and Barbuda LichtensteinSeychelles Argentina Malaysia Singapore AustraliaMauritius South Africa Barbados Mexico South KoreaBelize Monaco State of Kuwait Botswana New ZealandState of Qatar Brazil Norway Switzerland BruneiOman Thailand Canada Monaco The BahamasChile Panama The Holy See Costa Rica Principality of AndorraTrinidad and Tobago Croatia Republic of Iceland United Arab Emirates IsraelSaint Kitts and Nevis USA Japan San-Marino UruguayTo learn more about how to apply for a visa and visa regulations, please contact the Ministry of Foreign Affairs or the Civil Registry Agency of theMinistry of Justice.
  • 5. Living in Georgia Living and working in Georgia means being part of a well-functioning society in a dynamic environment. The quality of housing,education and health care is excellent. Georgia offers many opportunities for balancing a career with family life and leisure. Sincethe Soviet period, Georgia has long been distinguished for the quality of its public parks, seaside resorts, spas and mountain skiresorts. In most parts of the country there is plenty of free space and easy access to outdoor activities, such as adventure and eco-tourism. The majority of industries and businesses are located within Tbilisi, Kutaisi, Batumi and Poti. Housing in these areas is offered at avariety of levels and prices, ranging from US$200 - US$3,000 per month. There are no real estate ownership restrictions forforeigners. They are guaranteed the same rights as Georgian citizens. In Georgia, there are 129 universities and several international schools for children. With hundreds of hotels, resorts and spaslocated throughout the country, Georgia also provides a wide spectrum of possibilities for business or pleasure travel.
  • 6. Travel InformationAs the Regional Hub for multinational corporations operating in the Black Sea and Southern Caucasus Regions, Georgia offers amultitude of resources and services while providing direct access to neighboring countries. Geographically well situated in the Southern Caucasus, Georgia can be reached easily from most major European, Central Asian andMiddle Eastern cities. Tbilisi International Airport and Batumi International Airport, with direct connections to more than 32international cities, offers easy access to Georgias capital: 57 flights to Europe weekly 55 flights to CIS weekly 2 flights to GCC weekly 7 cargo flights weeklyIn 2010 alone, 2 million people traveled to Georgia. To keep pace with travel demand, USD 120 million was invested in rehabilitatingboth Tbilisi and Batumi International Airports
  • 7. Georgia Profile /Georgia Country Facts Georgia strategic location is an asset to any investor. As a bridge between Europe and Asia, Georgia offers direct access to European,GCC and CIS markets (more than 1 billion consumers). Georgia is a prime location for centralized market operations in the Black SeaRegion and the preferred choice for Regional Headquarters and multi-country distribution centers, contact centers and shared servicecenters.Area Population 2010 Life expectancy Official language Literacy69 700 sq km 4,4 mln 76 years Georgian 100%Capital Currency (code) GDP 2010 GDP - Real Growth Rate 2010Tbilisi Lari (GEL) US$ 11.7 billion +6.4%Projected 2010 Real GDP Growth Rate+4.9%GDP - Per Capita 2010US$ 2629.0Inflation rate 2010 (average annual) 11.2%Unemployment rate 16.3%Total exports 2010 (Mil. USD) 1583.3Total imports 2010 (Mil. USD) 5095.5Trade surplus/deficit 2010 (Mil. USD) -3512.2Exchange rate - USD/GEL 2010 (Period average) 1.7826Exchange rate - EUR/GEL 2010 (Period average) 2.3644
  • 8. WHY TO INVEST IN GEORGIA 10 Reasons to Invest in GeorgiaThe World`s Leading ReformerThe World Bank hails Georgia meteoric five-year rise from 112th in 2005 to 11th in the 2010 World Bank & IFC “Doing Business”Index as unprecedented. “Since the World Bank began keeping records,” says survey author Simeon Djankov, “no other country hasmade so many deep reforms in so many different areas so consistently.”Strategic Geographic LocationGeorgia strategic location is an asset to any investor. As a bridge between Europe and Asia, Georgia offers direct access toEuropean, GCC and CIS markets. Its three major oil and gas pipelines, Black Sea ports, well-developed railway systems, togetherwith its airports are playing an increasingly important role in linking the East and West.Stable Macroeconomic EnvironmentConsistent macroeconomic policies are producing strong economic growth, with GDP increases of close to 10% before the crisis,reaching max of 12% in 2007. Despite the slowdown caused by the global financial crisis, Georgia real GDP growth rate was 6.4% in2010.Liberal Trade RegimesGeorgia has low tariffs, streamlined border clearance procedures and preferential trade regimes with major partners, including theEU, the U.S. and free trade with Turkey and CIS countries. Georgia has been a member of the WTO since 2000 and has noquantitative restrictions on trade.Diverse Investment SectorsWith well-diversified investment sectors in energy, healthcare, agriculture, telecommunications, real estate & construction andinfrastructure development, Georgia is not simply another marketplace, it is a genuine opportunity. Source: National Investment Agency of Georgia
  • 9. Low TaxesGeorgia Tax System can be summarized as “Fewer Taxes, Lower Rates”. Since 2004, the number of taxes was decreased from 21 toonly 6 today. Personal income tax is a flat 20% while corporate income tax rates are a flat 15%. These improvements have madeGeorgia one of the most attractive tax regimes globally. In 2008, Forbes Magazine designated Georgia as the “4th Least Tax-BurdenedCountry”.Simplified Licensing and Permitting ProceduresThe Government of Georgia is working hardly to sustain future development of the Economy of Georgia. New Financial and Economicacts have been adopted by the Parliament, which obviously will help to maintain strong economic growth in Georgia.Developing InfrastructureIn order to further exploit the full potential of the Georgia strategic location and encourage foreign investment in the sector, theGovernment of Georgia, in cooperation with private enterprises, continues to develop infrastructure – roads, railways, sea ports, andairports, while simplifying customs and other administrative procedures including licensing reforms.Business Friendly EnvironmentGeorgia has been rated as the worlds one of the best countries for doing business on the basis of its business infrastructure, financial,legal and professional services, and its low and simple tax system. The WBs report on Doing Business 2011 can easily prove Georgia asone of the best destination for investors.World`s Leader in Labor Freedom and Labor Force LiteracyGeorgias new Labor Code, hailed as one of the worlds best in international rankings, reduces labor costs and gives greater freedom ofcontract to employers and employees. Simultaneously, Georgia offers the worlds most literate workforce, and very competitiveprevailing wage rates. Source: National Investment Agency of Georgia
  • 10. Doing Business in GeorgiaSetting up a business in Georgia is a straightforward process. Procedures are simple and efficient, based on a transparent system thatpromotes the establishment of new enterprises. In fact, the registration process takes only 1 day to complete. Georgian economy and industry is very entrepreneurial and highly motivated to develop rapidly. As industries in Georgia develop, firmsand investors are looking for opportunities to invest. The combination of dynamic economic growth, pro-business legislation, a liberal taxcode, a strong legal framework to protect investors and an educated and skilled workforce presents a solid platform for successfulbusiness in Georgia.Currently, there are approximately 260,000 businesses operating in Georgia, with more than 4,600 businesses established by foreigncapital or with its participation. Source: National Statistics Office of Georgia.
  • 11. Tax System To enhance Georgia Investment & Business Climate, the Government has dramatically overhauled its tax system since 2004. Byimplementing a liberal reform agenda, Georgia has simplified its processes and has reduced the number of taxes from 21 in 2004 toonly 6 today.These improvements have made Georgia one of the most attractive tax regimes globally. In 2008, Forbes Magazine designatedGeorgia as the “4th Least Tax-Burdened Country”.Currently, Georgia has established Double Taxation Treaties with 31 major trading partner countries and plans to finalize several morein 2011. Additional reforms are projected to decrease tax rates even further in the next few years.In 2010, The government submitted to Parliament the constitutional Law on Economic Liberty, Opportunity and Dignity (the LibertyAct). With the Liberty Act, no new taxes or tax rate increase is possible without a nationwide referendum.No payroll tax or social insurance tax Capital expenditure can be depreciated fully in the year it has been incurred of the operation, and 10-year loss carry forward isavailableNo capital gains taxNo wealth tax, inheritance tax or stamp dutyForeign-source income of individuals fully exemptedTAX-FREE REGIMES For investors interested in locating their industrial operations in Georgia, there are 3 Tax-Free Regimes available to take advantageof:Free Industrial ZonesFree Warehouse EnterpriseInternational Finance Company
  • 12. Special Tax-Free Regimes in GeorgiaSpecialized tax rates and procedures have been adopted for the 3 Tax-Free Regimes. The purpose of these Tax-Free Regimes is toestablish new international financial institutions in the country, to encourage economic growth and to support sustainabledevelopment in Georgias trade-transit function internationally.The three types of Tax-Free Regimes are:• Free-Industrial Zones• Free Warehouse Enterprise• International Finance Company Designation SPECIFIC TAX FREE INDUSTRIAL FREE WAREHOUSE INTERNATIONAL ZONE COMPANY FINANCIAL COMPANYCorporate Income Tax 0% 0% 0%Value Added Tax 0% 0% 0%Customs Tax 0% 0% 0%, 5% or 12%Property Tax 0% up to 1% up to 1%Personal Income Tax 20% 20% 20%Net Operating Losses (years)Carry back 0 0 0Carry forward 0 0 0
  • 13. Legal FrameworkGeorgian Legislation available in English:Investors Handbook – A legal Guide to Business in GeorgiaOn Additions and Modifications to the Law of Georgia on Organizing Lotteries, Games of Chance and other Winning GamesOn Approving the Rules for video surveillance systems at the locations of gambling and other winning games (other than promotional drawing games)and outer perimeters of such locations and installation and operation thereofOn Approving the criteria that the general rule of a game submitted by an entity wishing to organize a promotional drawing game must meetThe Law of Georgia on Gambling Business Fee Since 2004, Georgia has implemented a proactive strategy in developing its legal framework in order to attract investment as well as to protectinvestors and their assets. Below are highlights of Georgia legal framework as it relates to international investment.INVESTOR PROTECTIONPromoting investment is considered to be a primary goal of the State economic policy. Georgian legislation provides for the protection of investorsand their assets through domestic regulations, as well as through the number of Bilateral Investment Treaties and international agreements withpartner countries and organizations. With few exceptions, foreign investors are guaranteed fair and equal treatment under the law, regardless of theirnationality, and have the same rights and guarantees as Georgian companies.INVESTMENT GUARANTEES Georgian legislation offers unconditional protection of investments. Assets of a foreign investor shall not be subject to expropriation, except when it isexplicitly provided in the law, decision of the court or constitutes a matter of urgent necessity as envisaged in the respective organic law and with faircompensation, including the amount of damages born by investor from expropriation. In any event investors have the right to challenge the decisionregarding the expropriation of the investment in the local courts of Georgia.The State protects investment during the state of war and provides equal treatment of foreign and domestic investors while compensating fordamages. Most significantly, should new laws be adopted worsening the investment conditions it shall not have a retrospective application to the existinginvestment for the period of ten years and the investor will conduct its activity in accordance with law applicable at the time when the investment wascarried out. Source: National Investment Agency of Georgia
  • 14. LABOR LAW Georgia has one of the most liberal Labor Codes in the World. According to the Heritage Foundation, Georgias ranking on the LaborFreedom Index was 99.9. Georgia is a member of the International Labor Organization, and investors are guaranteed authorization to hire foreignworkers, who are permitted to transfer their income abroad once they have complied with all state duties and levies.CHOICE OF LAW Georgian legislation provides the possibility to foreign investors to have their contractual obligations governed by the law of thecountry they choose. The choices of law provisions are legal, valid and binding under the laws of Georgia and will be recognized and followed byGeorgian courts.DISPUTE RESOLUTION According to the Law of Georgia on Promotion and Guarantees of Investment Related Activities, unless otherwise agreedbetween the parties, any dispute arising out of or in connection with the investment activity between the Government of Georgia and a foreigninvestor shall be resolved by the courts of Georgia. However, the most commonly favored tribunal is the International Center of Settlement ofInvestment Disputes decisions of which are final and binding on the parties and are easily enforceable through the 1958 New York Convention onRecognition and Enforcement of Foreign Arbitral Awards to which Georgia joined on June 2, 1994.INTERNATIONAL AGREEMENTS Georgia is party to the EU initiative, the European Neighborhood Policy, which, from a legislation standpoint, meansthat Georgian legislation should be brought in line with the EU laws.Furthermore, Georgia has recognized technical regulations of European Council, Organization for Economic Cooperation and Development (OECD), andits main trading partner countries and permitted their comparable activities, which will consequently promote the development of businessenvironment and the reduction of technical obstacles in trading.INTERNATIONAL TRADE AGREEMENTSGeorgia has been a member of The World Trade Organization since 2000 and benefits from Most Favored Nation Regime with WTO Members, whichprovides lower tariffs for WTO members. It has joint major bilateral agreements within the WTO.Georgia benefits from a Generalized System of Preferences when trading with the USA, Canada, Switzerland and Japan. Accordingly, lower tariffs areapplied on goods exported from Georgia into these countries.Georgia is beneficiary of GSP Plus trading regime, which allows Georgia to export 7200 products to the 495 million EU market duty free.Georgia has Free Trade Agreement with CIS countries and Turkey (since November 1, 2008). Source: National Investment Agency of Georgia
  • 15. InfrastructureREASONS TO CHOOSE GEORGIA:• Strategic Location for Trade & Transit• Oil & Natural Gas Bridge to Europe• Revitalized Transport Infrastructure• Stable Cross-Border Energy InfrastructureTRANSPORT INFRASTRUCTUREAs a transport-transit hub for the region, Georgia understands the needs of international trade and has strategically invested a majorportion of public investment into developing its transport infrastructure. Georgia s proactive strategy of developing a first-rateinfrastructure is aimed at encouraging foreign trade and at strengthening Georgia s function as a major regional transit hub and as areliable partner in the TRACECA corridor.To accomplish this, significant public and private investment has been made into Georgia s infrastructure to improve market accessibilityand logistics execution.Some recent major projects include:• Revitalizing the National Highway Systems• Rehabilitation and expansion of the National Railway System• Renovation of Tbilisi & Batumi International Airports and beginning stages of Regional Airports• New international airports in Kutaisi and Mestia• Expansion of cargo transit capacity at Batumi Port, Kulevi Port and Poti Port• Rehabilitation of Rail Ferry Routes with Ukraine, Romania, Russia and Bulgaria• Baku-Tbilisi- Akhalkalaki-Karsi Railway – Strategic Link, Integrating Georgian & Turkish Railways Source: National Investment Agency of Georgia
  • 16. Source: National Investment Agency of Georgia ENERGY INFRASTRUCTURE Georgia is a net exporter of electricity, and current public and private investments are pushing this market to achieve expand further. Currently, Georgia exports electricity to Turkey, Russia, Azerbaijan and Armenia. The Government expects production to increase dramatically over the next several years, which has stimulated new public investment in High-Voltage Transmission lines to Turkey. These new lines will provide reliable cross-border infrastructure for potential investors investing in power generation. Recent investments in hydropower generation have caused an upsurge in Green Energy investment throughout Georgia. Georgia is well positioned to take advantage of Green Energy investment since only 10% of Georgia s hydropower potential has been utilized. For more information, please visit the website of the Ministry of Energy and Natural Resources of Georgia. OIL & GAS INFRASTRUCTURE Georgia s role as a transit corridor of oil and natural gas has led to significant investments in oil and natural gas transport infrastructure. Specifically, over USD 5 Billion was invested in 3 oil and gas pipelines to transport fuel from Central Asia and the Caspian to Western Europe: the Baku-Tbilisi- Ceyhan (1,768 km), the Western Route Export Pipeline (830 km) and the South Caucasus Gas Pipeline (692 km). The upcoming Nabucco Pipeline, which will have one of its starting points at the Georgian border with Turkey, will connect the world s richest gas regions - the Caspian region, Middle East and Egypt - to the European consumer markets.
  • 17. Financial & InsuranceREASONS TO CHOOSE GEORGIA:• Stable & Resilient Banking System• Highly Liquidity Levels• High Profitability & Risk Management• Significant International PresenceThe economic reforms implemented since 2004 have greatly boosted the health of banks and financial institutions in Georgia. Banking isnow a major economic forces and one of the fastest growing sectors in Georgia. This sector has gained strength and stability in severalareas, including: capital adequacy, profitability, asset quality and risk management.Liberal regulations have made commercial and investment banking, insurance, credit cards and securitization attractive areas ofinvestment. This sector s development has led to diversification of loans and the lowering of interest rates, further stimulatinginvestment opportunities.Key Commercial Banking Statistics:• Aggregate Loan Portfolio: GEL 4.8 Billion• Aggregate Equity Capital: GEL 1.5 Billion• Aggregate Gross Revenues (Q1 2010): GEL 333.6 Million• Aggregate Net Profits (Q1 2010): GEL 15.3 MillionINTERNATIONAL PRESENCEGeorgia s financial services sector has proven to be resilient despite the global financial crisis and brief periods of political instability. Thepresence of international commercial banks and investors has provided Georgia with additional strength and integration into the globalfinancial market.Currently, there are commercial banks operating in Georgia from the UK, Germany, France, Greece, Turkey, Azerbaijan, Kazakhstan,Russia. The share of foreign capital in Georgian banks is approximately 77.4%.
  • 18. TourismREASONS TO CHOOSE GEORGIA:• Tourism is Developing Rapidly• Opportunity for Robust Growth• International Standards of Hospitality• Increasing Tourist Arrivals in GeorgiaGeorgia s Tourism sector is a robust and rapidly growing industry. In 2010, more than 2 million people visited Georgia, representing anincrease of 36% compared to 2009. 63.3% of these visitors live in CIS countries. Despite the slowdown caused by the global financialcrisis, in 2009 compared to 2008, the number of Hotels and Guesthouses increased from 353 to 386.INTERNATIONAL INVESTMENTInvestment in the Tourism industry has grown substantially since 2004. These investments include airport renovations, resortconstruction and major hotel projects. Marriott, Sheraton, Radisson Blue and Holiday Inn are already operating in this sector, whileIntercontinental, Kempinski and Hilton are in the process of constructing their facilities.INVESTABLE AREASGeorgia s natural beauty, seashore and mountains are a constant attraction for tourists. With the increasing growth of tourism inGeorgia, many investment opportunities have been created:• Health Spas & Sanatoria• Traditional Spas & Sea Resorts• Mountain Winter Resorts• Wine & Vineyard Tours• Hotel Development• Restaurants, Cafes & Clubs• Cultural Tourism• Eco-Tourism• Adventure Tourism• Historical Tours Source: National Investment Agency of Georgia
  • 19. Real Estate DevelopmentREASONS TO CHOOSE GEORGIA:Resilient to Economic SlowdownHistorically High Growth RatesHigh Demand InvestmentsSophisticated DevelopmentsIn Georgia, the Real Estate industry is among the most rapidly growing industries. Despite the slowdown from the global financialcrisis, several international hoteliers are in the process of building their facilities, including Intercontinental, Kempinski and Hilton.Construction enjoyed high rates of output and employment growth over the past few years, but, since 2008, the real estate marketboom has moderated. Boosted by nonstop economic reforms and substantial FDI inflows, Georgian real estate continues to show amoderate growth showing strong resilience against the global challenges.In Georgia, Real Estate prices have increased more than four times since 2003, but demand still continues to exceed existing supplyacross all sectors. Georgian real estate market offers sophisticated development opportunities across virtually all real estate sectors. Source: National Investment Agency of Georgia
  • 20. Transportation & LogisticsREASONS TO CHOOSE GEORGIA:• Strategic Route between Europe & Asia• Direct access to International Markets of 1 Billion Consumers• Revitalized Transportation Infrastructure• International Logistics Companies OperatingAs a strategic link on the original “Silk Road”, the shortest route from Europe to Asia goes through Georgia. The country is a key linkin oil and gas pipelines from Central Asia to Western Europe. Georgia s oil and gas pipelines, Black Sea ports, well-developed railwaysystems and airports link the East and the West.Georgia serves as a trade and transit hub for the Southern Caucasus and Black Sea Region, providing direct access to internationalmarkets of more than 1 billion people. Transportation is one of the fastest growing industries in Georgia and offers significantinvestment opportunities. In 2010 alone, 35% of all foreign investment was directed into this industry, demonstrating the sector sgrowth potential.In 2009, Georgia s airports, seaports, railway and highway system carried:• 103.4 million metric tons of cargo• 624.7 million passengersGeorgia s Transportation Infrastructure has been newly revitalized and provides first-rate market accessibility and logisticsexecution. Major international freight forwarders, cargo forwarders, charter brokers, air, sea and land customs brokers operate inGeorgia. Source: National Investment Agency of Georgia
  • 21. IT & CommunicationsREASONS TO CHOOSE GEORGIA:• High Demand for New Technologies• Successful Implementation of Advanced Technologies• Extensive Fiber Optics Network• Skilled & Qualified WorkforceHIGH GROWTHGeorgia s Telecommunications industry has recently experienced robust growth and expansion of the market with introduction of the latest ITCtechnologies. Telecommunications is one of the fastest developing industries in Georgia.Today Georgia has 3 million mobile (69% of total population) subscribers and total mobile network coverage is above 97% of the populated territory ofGeorgia. Total industry revenues in 2007 were more than GEL 1.2 Billion, compared to GEL 596,000 in 2004. With introductions of new technologies,officials expect this number to increase significantly.Increased internet usage also introduces many technology-related investment opportunities. Currently, 38% of residents in the capital city, Tbilisi, usethe internet. Since the beginning of 2008, the number of Tbilisi residents who use the internet has doubled. In other major Georgian cities, internetusage rates vary between 20-31%. These rates are significant when compared to other regions around the world.Source: Internet World Statistics, Miniwatts Marketing Group.LIBERAL LEGISLATIONIn Georgia, recent “Electronic Communications” legislation has opened up opportunities for investors and entrepreneurs across the whole ITC sector.Licensing requirements have been liberalized, requiring licenses only needed for radio frequencies and numbering resources.KEY COMPONENTS OF GEORGIA S ITC NETWORK:• Submarine Fiber Optic Cable• Wireless and Land Broadband Service• 3.5G Systems IntroducedUSAGE STATISTICS:• Mobile Subscribers 3,060,438• Internet Subscribers 1,300,000• Fixed Wireless network subscribers 239,313• PSTN subscribers 590,909 Source: National Investment Agency of Georgia
  • 22. Energy Source: National Investment Agency of GeorgiaREASONS TO CHOOSE GEORGIA:• High Hydro-Power Energy Potential• Pro-Business Legislation• Skilled & Qualified Workforce• Reliable Cross-Border InfrastructureIn Georgia, electricity generation is going through a transformation to Clean & Green Energy production. As part of this transformation, private andpublic investment has been made to fully rehabilitate key infrastructure components. Likewise, recent legislation has deregulated and unbundled energyservices, which has stimulated further investments in generation, transmission and distribution.IMMENSE HYDRO POWER POTENTIALRecent investments in hydropower generation have caused an upsurge in Green Energy investment throughout Georgia – particularly in hydro powerproduction. Georgia is well positioned to take advantage of Green Energy investments because:• Georgia ranks as a “Top Country” globally in Water Resources per Capita• There are 26,000 rivers on the territory of the country. Their total length is approximately 60 000 km.• The entire fresh water supply of Georgia, which is made up of ice, lakes and water reservoirs, is 96.5 km3.• Around 300 rivers are significant in terms of energy production; their total annual potential capacity is equivalent to 15 GW, while the average annual production equals 50 mln KWh.• Only 15-18% of Georgia`s hydropower potential (2.7 GW) has been utilized.• Georgia`s stable economy, increasing power demands, significant public infrastructure investments, pro-business legislation and deregulated energy sector offer considerable investment opportunities in Hydro Power Production.• According to the “Electro-energy and Natural Gas” Law, Georgia guarantees deregulation of the hydro power stations built after August 1, 2008. These stations have a right to trade power with free, deregulated tariffs.INCREASING DEMAND FOR GEORGIAN POWERGeorgia is a net exporter of electricity, and current public and private investments are pushing this market to achieve expand further. In Turkey,electricity consumption is increasing at a dramatic pace, requiring its domestic energy sector to double its capacity by 2020. Likewise, many countries inthe region are also seeing consumption outstrip domestic supply.Currently, Georgia s excess supply of electricity offsets the increasing demand in Turkey, Russia, Azerbaijan and Armenia. The peak demand season(summer) in many of these countries is equally matched by Georgia s peak supply season, when river flows are at their highest.The Government expects new investments to increase production dramatically over the next several years, which has stimulated Georgia to invest inHigh-Voltage Transmission lines to Turkey. These new lines will provide reliable cross-border infrastructure for potential investors investing in powergeneration
  • 23. ManufacturingREASONS TO CHOOSE GEORGIA:• Long history of manufacturing• Skilled and low-cost workforce• FIZs offer preferred market access to more than 500 Million consumers• Tax-Free Regimes available for production and export• Considerable natural resources and raw materials• High domestic demand for manufactured goodsGeorgia`s natural advantage as a Regional Hub in the Black Sea and South Caucasus Regions – and as a gateway between the Caucasus and CentralAsia – provides many benefits to investors in manufacturing and processing. Specifically, Georgia has the best cost factors, logistics and transport chainand business environment for serving the Southern Caucasus Region, as well as many key raw materials.Since 2004, Georgia has seen both domestic and international investment in manufacturing across all major sectors, including: apparel, textiles,pharmaceuticals, mining and excavation (e.g., gold, silver, coal and ores), building materials, natural resources processing, aircraft, shipbuilding,methane extraction and auto parts.In 2010, Georgia`s Total Output was GEL 13.3 Billion. Major outputs include steel, aircraft, machine tools, electrical appliances, mining, chemicals,apparel, wood products and wine. Total export in 2009 were USD 1.6 Billion, of which natural ores, ferro-alloys, fertilizers, motor cars, wine, waters,fruits and nuts, electrical energy and vehicles were the major exports.With the establishment of Georgia`s Free Industrial Zones, there are new incentives and opportunities to process, produce and export goods with aminimal tax burden, because in FIZ, businesses are exempted from all tax charges except Personal Income Tax. Firms can export goods free of tradebarriers to global markets of more than 500 million consumers.INVESTABLE AREASGeorgia s Manufacturing Sector is growing and expanding rapidly, generating attractive returns on capital. With the introduction of Georgia`s 3 FreeIndustrial Zones, many new investment opportunities have been created:• Apparel/Textiles• Pharmaceuticals• Medical Devices• Packaging• Electronics• Household goods• Wood Processing• Metallurgy• Petrochemicals• Organic Fertilizers• Construction Materials• Automotive
  • 24. PharmaceuticalsREASONS TO CHOOSE GEORGIARecently simplified pharmaceutical regulationNo VAT or customs taxes on pharmaceuticalLow cost, but well qualified labor in the pharmaceutical industryMain gateway between Europe & AsiaConsiderable natural resourcesHIGH GROWTHEmerging markets are expected to drive growth in the global pharmaceutical market over the coming decade, Georgia and the surrounding regionhave significant room for growth. In this context, Georgia offers the key growth opportunities.Pharmaceutical exports from Georgia have grown at an annual rate of 51% for last 5 years..Georgia already exports pharmaceuticals to 35 countries; with $37 million in pharmaceutical exports in 2011.Recognizing Georgia s future potential in the pharmaceutical sector, the Georgian Government is committed to continual enhancement of theregulatory environment, including plans to introduce a GMP certifying agency by 2016 which will enhance the ability of Georgian pharmaceuticalproducers to export to other countries.Also making Georgia an attractive strategic base for pharmaceutical production are its low costs of energy and labor (average wages approximately30% less than in nearby Turkey) .In Georgia there are a number of representatives of foreign manufacturers of pharmaceuticals, also several foreign companies are doing clinicaltrials, and a number of distributors/wholesalers that are foreign owned or with foreign investment. There are also a number of institutes andprivate companies that have had foreign support or cooperation for pharmaceutical research.LIBERAL LEGISLATIONWith recent liberalization and simplification of regulations, it is an ideal time to invest and enter the market. Liberalization can be expected totighten up eventually, making new entry more difficult, and those players that will already be established in the market will possess significantmarket advantages.INVESTABLE AREASIt is ideal time to invest and enter pharmaceutical market in Georgia. There are vast number of investment opportunities. Some of the mostadvantageous investable sectors include:– Bacteriophages– Natural / herbal medicines– R&D / Clinical Testing