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INVEST
  N
IN GIA
 N
 G
 GEORGIA
    INV E S TMEN T CLIMATE
    INVESTM ENT CLIM ATE &
 OPPOR TUNITIES
 OPPORTU NITIES IN GEORGI A
         Georgian National Investment Agency 2013
www.investingeorgia.org 1




  ADVANTAGES OF GEORGIA

  »   Business friendly environment with low levels of taxation, simple and fair tax administration




 VEST
  »   Efficient, pro-business and corruption-free government
  »   Enlargement of market size by Free Trade Agreements
  »   Solid sovereign balance sheet
  »   Stable and conservatively managed banking sector
  »   Multi-modal maritime, land and air access infrastructure for trade, logistics and manufacturing
  »   Stable and competitively priced energy supply
  »   Flexible labor legislation
  »   Very low crime rate




ORGIA
  №1 REFORMER IN THE WORLD OVER THE PAST 5 YEARS – WORLD BANK



                                       GEORGIA - SOVEREIGN CREDIT RATINGS




 BB- Stable (Upgraded                        BB- Stable                             Ba3 Stable
  from B+ Positive in                (Upgraded from B+ Positive                  (Affirmed in August
   November 2011)                        in December 2011)                            2012)
DOING BUSINESS IN GEORGIA


Country’s impressive progress in improving business climate has




                                IN
been well documented in a number of international indices.



     EASE OF DOING BUSINESS                   INDEX OF ECONOMIC FREEDOM




                            IN GEO
                             N
                   Up from 112 in 2005                            Up from 99 in 2005



           Source: World Bank, 2013              Source: The Heritage Foundation, 2013
          (Rank out of 183 countries)                 (Rank out of 183 countries)



www.investingeorgia.org 2
www.investingeorgia.org 3


 CORRUPTION FREE COUNTRY


 Georgia today is essentially a corruption-free investment




 VEST
   S
 destination where rule of law have been given the right way



                            GLOBAL CORRUPTION BAROMETER



                                                                   Percentage of users
                                                                   paying a bribe from in




ORGIA
 RGIA
                                                                   the past 12 months




   GEORGIA          SOUTHEAEST EUROPE+TURKEY              EU


 Source: Transparency International’s Global Corruption
 Barometer , 2011 (Rank out of 176 countries)
ECONOMIC STRUCTURE AND TRENDS

GDP: STRONG REBOUND IN 2010 AFTER   RAPIDLY GROWING GDP
A RELATIVELY SMALL CONTRACTION IN   PER CAPITA




                                IN
2009, ROBUST GROWTH POTENTIAL

                                    4,000


                                    3,000


                                    2,000


                                    1,000


                                        0




BROAD-BASED AND DIVERSIFIED
NOMINAL GDP STRUCTURE 2011

                            IN GEO      STEEPER THAN EXPECTED
                                        GROWTH TRAJECTORY

                                       Initially planned at 6%, Georgia’s GDP real
                                       growth in three quarters of 2012, equaled to
                                       7.5%

                                       2011 OUTCOMES:
                                       » Tax collection increased 26% y-o-y
                                       » VAT turnover increased 26% y-o-y
                                       » Commercial bank lending to the real sector
                                            increased 24% y-o-y
                                       » Trade turnover increased 36% y-o-y


www.investingeorgia.org 4
www.investingeorgia.org 5


 LIBERAL TRADE REGIMES

 PREFERENTIAL TRADE REGIMES:                                                       CUSTOMS
 » FTA with CIS countries: Ukraine, Belarus, Azerbaijan, Armenia, Russia,           » Very simple and service




 VEST
     Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan            oriented customs policy and
 »   FTA with Turkey                                                                  administration
 »   DCFTA with EU will be signed next year                                         » Almost no custom duty - 90
 »   Negotiation on FTA with USA is in progress                                       percent of goods free from
                                                                                      import tariffs
 »   GSP+ with EU - 7200 products to the EU market duty free or with lower tariffs
                                                                                    » No quantitative restrictions
 »   GSP with USA, Norway, Switzerland, Canada, Japan - lower tariffs are applied on
     3400 goods exported from Georgia to these countries
 »   Member of WTO



 OPPORTUNITY - MARKET SIZE
                  KET




ORGIA
    A
 Population of Georgia - 4,5 million
 Existing FTA +350 million
 DCFTA + 0,5billion

 TOTAL ~ 0.9 BILLION
                                                                 orgi
                                                            Ge
                                                                    a




 Georgia: 4,5 million population
                           lation
 Access to the 0,9 billion market
TAXATION IS SIMPLE, LOW, EFFICIENT AND FAIR




                                IN
                            IN GEO
                                 O
» No payroll tax or social insurance tax

» No capital gains tax

» No wealth tax and inheritance tax

» Foreign-source income of individuals fully exempted

» Accelerated depreciation on capital assets

» Loss carry forward for corporate profit tax purposes (10 years)

» No restrictions on currency convertibility or repatriation of capital & profit

» Double taxation avoidance treaties with 40 countries


www.investingeorgia.org 6
www.investingeorgia.org 7



 LEADER IN FORBES RATING (TAX MISERY & REFORM INDEX)

 According to 2009 Tax Misery & Reform Index, released by Forbes




 VEST
 Business & Financial News, Georgia is the fourth least tax burden
 country after Qatar, UAE and Hong Kong




OR
ORGIA
LABOR AVAILABILITY

» Young labor – 50% of unemployed population are aged between 20-34




                                 IN
» Average monthly salary in 2011 – 377 USD
» Vocational Education Training Centers around Georgia provide professional courses in
  different types of practical subjects and most of the course’s fees are financed by the
  Government of Georgia.


GEORGIA - ONE OF THE MOST LIBERAL LABOR ENVIRONMENTS (3RD BEST
GLOBALLY), ACCORDING TO THE HERITAGE FOUNDATION, 2012




                             IN GEO
                                GEO
GREATER LABOR FREEDOM


                                                                     GEORGIA



                                                                     FRONTIER MARKETS AVG




      Source: MOF and Heritage Foundation, 2012



 www.investingeorgia.org 8
www.investingeorgia.org 9



 FOREIGN DIRECT INVESTMENT

 » Strong and Rising FDI Stimulates Economic Prosperity




 VEST
 » Key Industries Benefit from FDI
 » Reinvestment 30% (2011)
 » Georgia has bilateral treaties on investment promotion and protection with the 32 countries
   (negotiations launched with 24 countries)




 FDI BREAKDOWN BY SECTORS 2011                              FAVORABLE FDI/GDP RATIO




ORGIA
 RGIA
  GIA
    A
INVESTMENT OPPORTUNITIES IN GEORGIA




                                 IN
                             HYDRO POWER HUB


                             TOURISM


                             MANUFACTURING




                             IN GEO
                             AGRICULTURE


                             REGIONAL LOGISTICS CORRIDOR


                             REGIONAL SERVICE HUB


www.investingeorgia.org 10
www.investingeorgia.org 11



 HYDRO POWER HUB

 SIGNIFICANT HYDRO POWER POTENTIAL
 » Installed capacity of > 2,700 MW




 VEST
 » Additional potential > 4,500 MW

 Generation cost (0.06 USD) among the lowest in the region,
 ~50% lower than target market Turkey

 EXPORT CAPACITY

 » The only net electricity exporter in the region, with rapidly growing consumption rates
 » Construction of 400 kV power transmission line from Georgia to Turkey to be
   completed in 2013




ORGIA
 OPPORTUNITIES
 » Several large scale projects (> 100 MW)
 » ~ 70 small/medium projects (< 100 MW)
OVERVIEW OF GEORGIA’S (HYDRO-) POWER SECTOR




                                 IN
                                   • Domestic: Demand growth and increasing share of renewables
                                     requires an extension of hydropower generation by around 65%
            STRONG DEMAND            until 2020
            GROWTH PROSPECTS
                                   • Export: Georgia is surrounded by countries with a projected
                                     structural power deficit (e.g. Turkey, Russia South) or expensive
                                     power generation, opening up attractive export opportunities


            IMPORTANCE OF          • Power generation accounts for 3% of GDP and ~ 1% of
            THE SECTOR LOW IN        employment but is of high strategic importance to Georgia
            TERMS OF GDP AND
                                   • ~ 10% of power production are exported, but Georgia still needs to
            EMPLOYMENT




                             IN GEO
                                     import power during winter


                                   • Georgia boosts significant and economically viable HPP potential –
            POWER SECTOR WITH        already today 75% of power generated via HPP (2,700 MW) – 25%
            STRONG FOCUS ON          via thermal (mainly gas)
            COST COMPETITIVE HPP   • All new HPPs operate in a liberalized market
                                   • Cost of hydropower generation is very competitive in the region


                                   • FDI inflows amounted to USD 200 million in 2011 and are growing
            LARGE PROJECTS HAVE
                                   • 65% of economically viable potential not yet exploited
            BEEN PLACED AND
            PIPELINE IS FILLED     • Projects of up to USD 750 million have been concessioned to
                                     investors from e.g. India, Turkey, Czech Republic and other counties.
                                   • Pipeline well filled with several large scale projects (100-702 MW)
                                     as well as 70+ smaller projects




www.investingeorgia.org 12
www.investingeorgia.org 13



 GEORGIA SURROUNDED BY COUNTRIES WITH A STRUCTURAL
 POWER DEFICIT OR EXPENSIVE POWER GENERATION




 V
 VEST                                                                                • Turkey expected to
                                                                                       have deficit of up
                                                                                       to 80-120 TWh by
                                                                                       2020, with seasonality of
                                                                                       its demand matching
                                                                                       Georgia’s supply




ORGIA
 R
                                                                                     • Russia’s Southern districts
                                                                                       will also experience a
                                                                                       structural deficit of up to
                                                                                       40 TWh by 20201
                                                                                     • In other markets,
                                                                                       Georgia’s hydropower
                                                                                       is very cost-competitive
                                                                                       compared to local tariffs2

  1 Assuming current consumption and supply pattern
  2 This does not even include countries with heavily subsidized
  electricity generation (e.g. Azerbaijan, Kazakhstan)




  STRUCTURAL DEFICIT BY 2020                                       NO DEFICIT, BUT CURRENT TARIFFS >
  AD HOC DEFICITS PROJECTED                                        GEORGIA’S GENERATION COST
  NO DEFICIT, BUT SUBSIDIZED TARIFFS
HYDROPOWER PIPELINE BOOSTS SEVERAL NEW MEGAPROJECTS
 ABOVE 100 MW CAPACITY THAT ARE CURRENTLY OPEN FOR INVESTMENT




                                  IN
                                   N
           PROJECT             CAPACITY   FORECAST INVEST.   READY TO
                                              VOLUME          INVEST?
                                            USD MILLIONS

• NAMAKHVANI CASCADE           450 MW           926

• KHAISHI HPP                  400 MW           620




                              IN GEO
                                   O
• ONI CASCADE                  270 MW           599

• NENSKRA HPP                  210 MW           491

• TOBARI HPP                   200 MW           310

• FARI HPP                     180 MW           297

• LENTEKHI HPP                 120 MW           189


• HYDROPOWER PIPELINE ALSO BOOSTS ~70 SMALL/MEDIUM
 PROJECTS (<100 MW CAPACITY) THAT ARE CURRENTLY OPEN
 FOR INVESTMENT



 www.investingeorgia.org 14
www.investingeorgia.org 15



 TOURISM
 FAST GROWING SECTOR
 • Tourism contributes 6.7 % of GDP




 VEST
 • Number of visitors increased 38% in 2011 reaching 2.8 million and 56% in 2012 reaching 4.4 million
 • Majority of visitors come from : Turkey (34.9%), Azerbaijan (21.2%), Armenia (20.5%), Russia (11.6%)
    Europe (9.4 %)
 • Average duration of stay - 9 days, the median visitor stays - 2days / Average spend of USD 330
 • Overall capacity of < 15,110 rooms
 • Already operating international brand hotels - Sheraton, Radisson, Marriot, Holliday Inn, (under construction -
   Kempinski, Hillton) etc.




ORGIA
 POTENTIAL
 • Youth Olympics in 2015
 • Free tourism zones – summer resorts
 • Availability of gambling business – gaming is partially or completely banned in Russia, Ukraine, Azerbaijan,
   Kazakhstan,Turkey, Israel, Iran, Iraq
 • 8 national parks
 • 2400 springs of mineral waters
GEORGIA IS EXPECTING SIGNIFICANT GROWTH
TRAJECTORY IN TOURIST ARRIVALS




                                  IN
INTERNATIONAL ARRIVALS HAVE SEEN ~40% YEAR-ON-YEAR GROWTH


TOTAL INTERNATIONAL TOURIST ARRIVALS
NUMBER OF ARRIVALS INTO GEORGIA




                              IN GEO
                                                                 5.5

                                                           4.4


                                                     2.8
                                               2.0
                                   1.3   1.5
               1.0           1.1
     0.6




www.investingeorgia.org 16
www.investingeorgia.org 17



 INTERNATIONAL LUXURY HOTEL CHAINS DOING WELL:
 MORE ARE COMING TO THE MARKET

 VERBATIMS OF INTERNATIONAL HOTEL BRANDS IN GEORGIA




 VEST
                                                                         UPCOMING
                                                                         INTERNATIONAL HOTEL
 HOTEL CHAIN      HOTELIER’S ASSESSMENT OF PERFORMANCE                   BRANDS BEFORE 2015

                  “We have seen significant increases in occupancy
                  rate and financials since 2010. This year [2012] high
                                                                                         LOCATION
                  season has seen a very promising start. We have
                  advance reservations booked for almost the whole
                  summer”
                                                        – Omer Subasi                    BATUMI
                                                    General Manager




ORGIA
                  “ We are very optimistic as demand has been
                  increasing rapidly. Hotel occupancy hovers around
                                                                                         TBILISI
                  85%. Our guests come from all around the world
                  representing various sectors including business,
                  sportmen and tourists”
                                                      – Oto Berishvili
                                         Sales & Marketing Manager
                                                                                         BATUMI

                  “We have seen 7-8% more guests in our hotels
                  every year. Business and leisure travelers are our
                  two biggest client group and they come from all
                  over the world. Best occupancy period is summer                        TBILISI
                  from May to September”                                                 BATUMI
                                          – Alexander Kvaratskhelia
                                                Marketing Manager
                                                                                         TBILISI
INVESTMENT OPPORTUNITIES IN TOURISM SECTOR

                     “SUN-BEACH”           WINTER SKI           SUMMER                 SPA RESORTS            REGIONAL
                      RESORTS              RESORTS              MOUNTAINS                                     CASINO CITY




                                                IN
                                                                RESORTS
DESCRIPTION




                     Expansion of          Master development   Four season resort     Development of Spa     Development of
                     summer ”sun and       of winter resorts    value preposition      Resorts                large-scale
                     beach” franchise      with unique profile                                                 integrated casino
                     focusing on high-     equivalent to the                                                  complex to Serve
                     end segment           Alps                                                               regional markets.




                                            IN GEO
                     • All inclusive       • Government is      • Majestic             • Include hotels,      • Include hotels,
                       summer resorts        fully committed      landscapes              Different               casino
                     • New master resort     to provision         allowing                types of Clinics,      entertainment,
POTENTIAL LOCATION




                       development           of basic             for a wide range        fitness,Outdoor         family Services
                                             infrastructure       of summer               activities             and shopping
                                                                  tourism activities                          • Fiscal incentives
                                                                  such as trekking,                              available
                                                                  horse riding, bird
                                                                  watching and river
                                                                  racing

                     • Batumi              • Mestia             • Mestia               • Tskaltubo            • Batumi
                     • Anaklia             • Gudauri            • Gudauri              • Akhtala              • Tbilisi
                     • Kobuleti            • Bakuriani          • Bakuriani            • Other locations      • Other locations
                     • Other Black Sea     • Goderdzi           • Goderdzi
                       locations                                • Kazbegi
                                                                • Other locations




     www.investingeorgia.org 18
www.investingeorgia.org 19



 MANUFACTURING SECTOR

 OVERVIEW:                                                        OPPORTUNITIES:




 VEST
 • Manufacturing and industries account for around 14%            • Large import overhang in goods that are usually
   of GDP and ~ 5% of employment                                    not traded extensively provides regional import
 • Largest industries are food and beverages (3% of total           substitution potential in food processing, construction
   GDP) and metal products (2.5%)                                   materials, household gods etc
 • Advantage to process goods - competitive cost of               • Georgia’s current advantages in terms of handling
   power, labor and strategic location                              large transshipment flows, business stability, low
 • 2 Free Industrial Zones - In FIZ, businesses are                 cost of power generation and existing raw materials/
   exempted from all tax charges except Personal                    intermediate products provide opportunities for
   Income Tax                                                       large industrial bets, like production of iron and steel
                                                                    products, aluminum etc




ORGIA            Black
                  Sea
                            Kulevi
                               Poti
                                           FIZ
                                                 Mestia



                                                            FIZ

                                                      Kutaisi
                                                                             Russia




                                                                                          Tbilisi
                               Batumi



                                        Turkey
                         MRN
                                                                                                          Azerbaijan
                         Railway
                                                                            Armenia
TRADE BALANCE IN GEORGIA AND IN THE REGION


IMPORT OVERHANG, USD mln, 2011
                     mln,                    TRANSPORTATION




                                  IN
                                                  COST




                              IN GEO
 www.investingeorgia.org 20
www.investingeorgia.org 21



 SEVERAL HIGHLY ATTRACTIVE IMPORT
 SUBSTITUTION OPPORTUNITIES
 SECTOR              PRODUCT GROUP                        PRODUCTS




 VEST
                • Articles of cement and steel            • Prefabs
 Construction                                             • Ready-mix concrete
 - Building                                               • Bricks
 materials
                                                          • Finished articles of steel
                • Articles of wood                        • Plywood and laminated wood

                                                          • Tiles
 Construction   • Ceramic products                        • Sanitary ware




ORGIA
 - Finishing                                              • Windows
 elements       • Glass & glassware
                                                          • Glassware

                • Furniture                               • Doors
                                                          • Living furniture

                • Beverages and spirits                   • Bottling
 Food
 processing                                               • Fruit juices
                • Preparations of fruits and vegetables   • Jams
                                                          • Vegetable oils
                • Dairy and eggs
                                                          •   Milk
                                                          •   Cheese
                                                          •   Butter
                                                          •   Yogurt
                • Meat                                    • Poultry/Beef/Pork/Lamb


 Packaging      • Plastic packaging
                • Paper packaging
SEVERAL OPPORTUNITIES ARISING FROM GEORGIA’S
TRANS-SHIPMENT FLOWS AND RESOURCES

OPPORTUNITY      CURRENT ADVANTAGES TO BE LEVERAGED                   POTENTIAL FOR GEORGIA




                                 IN
ALUMINIUM
INDUSTRY         • Large transshipment flows of raw               • Value chain integration
                   materials/input (Bauxite) and aluminium       -   Production of aluminium
                   cross Georgia to/from Tajikistan (largest     -   Production of aluminium
                   aluminium plant in Central Asia)                  products (fabricated or end
                 • A lot of water recourses and large                products)
                   hydropower plants in the pipeline

IRON AND STEEL                                                   • Vertical integration of value chain
                 • Georgia mines Manganese ore
PRODUCTION                                                         by adding production of iron and
                 • Georgia produces ferro alloys, largely for
                   export (USD ~250 mn)                            steel and related end products




                             IN GEO
                 • Large imports of iron and steel products to   • Regional import substitution
                   Georgia (USD ~300 mn) and neighboring
                   countries


COPPER
                 • Georgia and Armenia export copper ores,       • Production of copper alloys
                   copper waste and scrap                            and end products (regional import
                 • Import overhang of copper products                substitution)
                   (alloys and final products e.g. wire, tubes,
                   pipes) amounts to USD ~200 mn in
                   the region
POLYMERS &
                 • Import overhang of plastic products           • Plastics and petrochemicals
OTHER PLASTICS
                   amounts to 230 mn in Georgia and 8 bln in         production (regional import
                   the region                                        substitution for plastics/rubber)
                 • Georgia transships large flows of
                   petroleum products




www.investingeorgia.org 22
www.investingeorgia.org 23



 AGRICULTURE


 OVERVIEW:




 VEST
 • Over 21 micro-climates - a wide range of grain, vegetables, hard and
    soft fruits, meat and dairy could be farmed

 • Agriculture accounts for 9% of GDP. It contributes ~53% of
    employment mostly in subsistence farming (average farm size of 1.22 ha)

 • Traditionally Georgia has strengths in wine, nuts, fruits which account
    for more than 60% of agriculture exports

 • The average gross monthly salary in the agricultural sector in Georgia




ORGIA
    is USD 220




 OPPORTUNITIES:

 • Import substitution opportunities - meat, dairy products, onions,
    potatoes etc

 • Export opportunities - traditional strong sub-sectors, like wine,
    walnuts, hazelnuts, sheep meat, etc

 • Productivity gain opportunities – tomatoes, apples, cucumbers, stone
    fruits, citrus etc
14 POTENTIAL PRIORITIES CROPS/LIVESTOCK
TO FOCUS DEVELOPMENT EFFORTS

HIGH POTENTIAL PROJECTS           GEORGIA’S COMPETITIVENESS




                                 IN
                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 




                             IN GEO
                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 

                             ▪ 




www.investingeorgia.org 24
www.investingeorgia.org 25



 REGIONAL COMPETITIVENESS AND POTENTIALS MAP




 VEST
                                        C O O
                                        CROP POTENTIALS BY REGION
                                                      S      GO




ORGIA
 BASED ON REGIONAL SPECIALIZATION (NATURAL ENDOWMENTS,
 CULTIVATION HISTORY), PRODUCTIVITY AND SEASONALITY
REGIONAL LOGISTICS CORRIDOR




                                      IN
TRANS-CAUCASIAN ROUTE
• Latent gateway between Europe and Central Asia
• Around 80% of port cargo and 60% of freight rail are transits




TRANSPORT INFRASTRUCTURE
• Rapidly developing road infrastructure




                                  IN GEO
• Ports are cost-competitive vs. alternative routes
• FDI inflows in the logistics sector have primarily targeted
   transport infrastructure




OPPORTUNITIES
• Deep-sea port with PanaMax vessel
• Containerization and logistical centers
• Direct connection with European and Central Asian
   railway networks




 www.investingeorgia.org 26
www.investingeorgia.org 27



       GEORGIA’S TRANSPORT INFRASTRUCTURE

             MODE OF TRANSPORT   EXISTING INFRASTRUCTURE                           UPGRADES
                                        AND FLOWS




 VEST
                                 RAIL                                       RAIL
                                 • 1,500 km (90% electrified)                • BTK connection to Turkey
 Road/Rail




                                 • ~7,000 rolling stock, 180 locos          • Modernization
                                 ROAD                                       • Tbilisi bypass
                                 • 1,500 km international road              • ~2500 new rolling stock
                                    + 20,000 km internal and local roads    ROAD
                                                                            • East-West highway upgrade

                                 POTI SEAPORT                               POTI SEAPORT




ORGIA
 RGIA
                                 • 13 berths, 8-10m depth                   • New container berth (2014)
                                 • Container and bulk (210k TEU)
                                 • Owned/operated by Maersk/RAKIA           DEEP-SEA PORT
 Maritime




                                 BATUMI SEAPORT                             • Min. 2 berth of 20m depth
                                 • 5 berths, 1 offshore mooring, 11m depth      (PanaMax)
                                 • 90% petroleum/oil, 10% containers (44k   • First phase: Dry bulk (10m tons)
                                   TEU)                                       and containers (200k TEU)
                                 • Operated by JSC KazTransOil              • USD 200 mn investment
                                 KUHLEVI SEAPORT                              volume
                                 • Crude oil, petroleum, and lubricants
                                 • Owned/operated by State Oil Company
                                    Azerbaijan

                                 TBILISI INTERNATIONAL AIRPORT              KUTAISI INTERNATIONAL
                                                                            AIRPORT
 Air




                                 • ~1 mn passengers (capacity: 3 mn)
                                 • Serving 28 destinations                  • Passenger, incl. low-cost
                                 BATUMI INTERNATIONAL AIRPORT                  airlines
                                 • 100,000 passengers                       • Currently under construction
CARGO TURNOVER
TRANSIT FLOWS THROUGH THE CORRIDOR                              CENTRAL ASIA
(MILLION TONS PER YEAR)                                         Kazakhstan




                                 IN
                                                                Uzbekistan
                                                                Tajikistan
                                                                Kirgizstan
                                                                Turkmenistan

                                                                CAUCASUS:
                                                                Azerbaijan
                                                                Armenia
                  APPROXIMATELY 80% ARE TRANSIT FLOWS




          Europe+Turkey
               Sender - 2.6
                             IN GEO
             Destination - 4.1
                Total - 6.7
                                       Central Asia+Caucasus
                                             Sender - 9.6
                                            Destination - 4.7
                                              Total - 14.3




www.investingeorgia.org 28
www.investingeorgia.org 29



 ANNUAL CARGO FLOW OF CAUCASUS & CENTRAL ASIA


 EXPORT




 VEST
                                     EU 22%




                                                       IMPORT




ORGIA
    A
                                                                  EU 1
                                                                   U 15%


  Other Regions 78%




                                                    Other Regions 85%
                                                                  8
            Export        I
                          Import
                               t     G dT t l
                                     Grand Total
 TOTAL      255 ml. ton 68 ml. ton   323 ml. ton
 EU          56 ml. ton 10 ml. ton    66 ml. ton         *Source : IGC TRACECA
GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED
REGION BOOSTING SIGNIFICANT RESOURCE RESERVES




                                 IN
                             IN GEO
                                  O
                                              FOR
                                          COMPARISON:
                                       REGION REPRESENTS
                                         ONLY ~1.6% OF
                                            GLOBAL
                                          POPULATION




www.investingeorgia.org 30
www.investingeorgia.org 31



 GEORGIA IS IN A HIGHLY STRATEGIC
 LOCATION FOR TRANSSHIPMENT




 VEST
   STRATEGIC LOCATION: IT SERVES AS AN ENTRY GATE TO THE CAUCASUS AND
   CENTRAL ASIA AS WELL AS A STEPPING STONE TO THE REGION




   LEVERAGING ITS LOCATION, GEORGIA’S TRANSPORT ECONOMY CAN BENEFIT




ORGIA
   FROM LARGE ADDRESSABLE TRANSIT FLOWS, GROWING ECONOMIES AND
   LANDLOCKED RESOURCES




   THE SHORTEST ROUTE BETWEEN EUROPE AND CAUCASUS/CENTRAL ASIA




   GREAT POTENTIAL OF BETTER INTEGRATION AND DEVELOPMENT
   OF THE REGION
REGIONAL SERVICES HUB


• Georgia’s service sector achieves leading ranks




                                 IN
  among regional economies in terms of value
  added and trade

• Services have major share of FDI inflow of 45% in
  2011 with USD 500 million:

  » Financial services have grown at 19% p.a. since
    2009 and is the leading service sub-sector for FDI
    attraction with 15% of total inflows in 2011




                             IN GEO
  » Consultancy services attracted 12% of total FDI
    inflows in 2011
  » Wholesale/retail trade accounts for 40% of
    service GDP, and strong FDI inflows rebound
    at 48% p.a. since 2009
  » FDI inflows in healthcare/social work have
    grown at 146% p.a. since 2007

• OPPORTUNITY TO CAPITALIZE:
  » Financial services/headquarters
  » Retail hub as the destination-of-choice
    for shopping




www.investingeorgia.org 32
www.investingeorgia.org 33



 OPPORTUNITY TO POSITION GEORGIA AS
 A REGIONAL RETAIL DESTINATION




 VEST
   ST
                                GEORGIA - REGIONAL RETAIL HUB

 Vision is to develop mega malls in key locations to transform Georgia - into the regional retail
 hub leveraging high traffic of foreign tourists and strategic geography




                                 BATUMI                   TBILISI




ORGIA
  GIA
 Benefits of destination mega mall
 development
 • Complement overall tourism strategy with
   solid retail value proposition
 • Retail magnet for foreign tourists and
   affluent local with longer duration of
                                                          Tbilisi and Batumi as most potential locations
                                                          • Established tourist destinations with 80%

                                                          •
                                                              of foreign tourist traffic in Georgia
                                                              Accessible with existing international
                                                              airports and major transnational highway/
                                                              railway
   visit (1/2 to 1 day), higher share of wallet,          •   Solid retail, hospitality and other
   and repeated visits                                        supporting services infrastructure
 • Presence of flagship brands will drive retail           •   Integration with other tourism offerings
   brand cluster growth                                       e.g. sun & beach, casino
                                                          •   Easier to drive investments
GEORGIAN NATIONAL INVESTMENT AGENCY




                                 IN
•    State agency
    - Promoting Georgia internationally
    - Supporting foreign investments and
      investors before, during & after
      investment process

•   “One-stop-shop” for investors            INVESTORS




                             IN GEO
•   Moderator between Investors,
    Government and
    Local Companies
                                   LOCAL      GNIA
                                 COMPANIES
                                                     GOVERNMENT




    Mission - Attracting Greenfield and M&A Investments

www.investingeorgia.org 34
www.investingeorgia.org 35



 WHAT YOU CAN GET FROM GNIA




 VEST
    » INFORMATION
    •   General data
    •   Statistics
    •   Sector Researches


    » COMMUNICATION




ORGIA
    •   Access to Government of Georgia at all levels
    •   Local partners (Business Associations, private companies)


    » ORGANIZATION OF SITE VISITS AND
        ACCOMPANYING INVESTORS

    » AFTER CARE
    •   Legal advising
    •   Supporting services
INVEST
IN GEORGIA
    GEORGIAN NATIONAL
    INVESTMENT AGENCY
       www.investingeorgia.org

  E-mail: enquiry@investingeorgia.org

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Investment Climate & Opportunities in Georgia

  • 1. INVEST N IN GIA N G GEORGIA INV E S TMEN T CLIMATE INVESTM ENT CLIM ATE & OPPOR TUNITIES OPPORTU NITIES IN GEORGI A Georgian National Investment Agency 2013
  • 2. www.investingeorgia.org 1 ADVANTAGES OF GEORGIA » Business friendly environment with low levels of taxation, simple and fair tax administration VEST » Efficient, pro-business and corruption-free government » Enlargement of market size by Free Trade Agreements » Solid sovereign balance sheet » Stable and conservatively managed banking sector » Multi-modal maritime, land and air access infrastructure for trade, logistics and manufacturing » Stable and competitively priced energy supply » Flexible labor legislation » Very low crime rate ORGIA №1 REFORMER IN THE WORLD OVER THE PAST 5 YEARS – WORLD BANK GEORGIA - SOVEREIGN CREDIT RATINGS BB- Stable (Upgraded BB- Stable Ba3 Stable from B+ Positive in (Upgraded from B+ Positive (Affirmed in August November 2011) in December 2011) 2012)
  • 3. DOING BUSINESS IN GEORGIA Country’s impressive progress in improving business climate has IN been well documented in a number of international indices. EASE OF DOING BUSINESS INDEX OF ECONOMIC FREEDOM IN GEO N Up from 112 in 2005 Up from 99 in 2005 Source: World Bank, 2013 Source: The Heritage Foundation, 2013 (Rank out of 183 countries) (Rank out of 183 countries) www.investingeorgia.org 2
  • 4. www.investingeorgia.org 3 CORRUPTION FREE COUNTRY Georgia today is essentially a corruption-free investment VEST S destination where rule of law have been given the right way GLOBAL CORRUPTION BAROMETER Percentage of users paying a bribe from in ORGIA RGIA the past 12 months GEORGIA SOUTHEAEST EUROPE+TURKEY EU Source: Transparency International’s Global Corruption Barometer , 2011 (Rank out of 176 countries)
  • 5. ECONOMIC STRUCTURE AND TRENDS GDP: STRONG REBOUND IN 2010 AFTER RAPIDLY GROWING GDP A RELATIVELY SMALL CONTRACTION IN PER CAPITA IN 2009, ROBUST GROWTH POTENTIAL 4,000 3,000 2,000 1,000 0 BROAD-BASED AND DIVERSIFIED NOMINAL GDP STRUCTURE 2011 IN GEO STEEPER THAN EXPECTED GROWTH TRAJECTORY Initially planned at 6%, Georgia’s GDP real growth in three quarters of 2012, equaled to 7.5% 2011 OUTCOMES: » Tax collection increased 26% y-o-y » VAT turnover increased 26% y-o-y » Commercial bank lending to the real sector increased 24% y-o-y » Trade turnover increased 36% y-o-y www.investingeorgia.org 4
  • 6. www.investingeorgia.org 5 LIBERAL TRADE REGIMES PREFERENTIAL TRADE REGIMES: CUSTOMS » FTA with CIS countries: Ukraine, Belarus, Azerbaijan, Armenia, Russia, » Very simple and service VEST Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan oriented customs policy and » FTA with Turkey administration » DCFTA with EU will be signed next year » Almost no custom duty - 90 » Negotiation on FTA with USA is in progress percent of goods free from import tariffs » GSP+ with EU - 7200 products to the EU market duty free or with lower tariffs » No quantitative restrictions » GSP with USA, Norway, Switzerland, Canada, Japan - lower tariffs are applied on 3400 goods exported from Georgia to these countries » Member of WTO OPPORTUNITY - MARKET SIZE KET ORGIA A Population of Georgia - 4,5 million Existing FTA +350 million DCFTA + 0,5billion TOTAL ~ 0.9 BILLION orgi Ge a Georgia: 4,5 million population lation Access to the 0,9 billion market
  • 7. TAXATION IS SIMPLE, LOW, EFFICIENT AND FAIR IN IN GEO O » No payroll tax or social insurance tax » No capital gains tax » No wealth tax and inheritance tax » Foreign-source income of individuals fully exempted » Accelerated depreciation on capital assets » Loss carry forward for corporate profit tax purposes (10 years) » No restrictions on currency convertibility or repatriation of capital & profit » Double taxation avoidance treaties with 40 countries www.investingeorgia.org 6
  • 8. www.investingeorgia.org 7 LEADER IN FORBES RATING (TAX MISERY & REFORM INDEX) According to 2009 Tax Misery & Reform Index, released by Forbes VEST Business & Financial News, Georgia is the fourth least tax burden country after Qatar, UAE and Hong Kong OR ORGIA
  • 9. LABOR AVAILABILITY » Young labor – 50% of unemployed population are aged between 20-34 IN » Average monthly salary in 2011 – 377 USD » Vocational Education Training Centers around Georgia provide professional courses in different types of practical subjects and most of the course’s fees are financed by the Government of Georgia. GEORGIA - ONE OF THE MOST LIBERAL LABOR ENVIRONMENTS (3RD BEST GLOBALLY), ACCORDING TO THE HERITAGE FOUNDATION, 2012 IN GEO GEO GREATER LABOR FREEDOM GEORGIA FRONTIER MARKETS AVG Source: MOF and Heritage Foundation, 2012 www.investingeorgia.org 8
  • 10. www.investingeorgia.org 9 FOREIGN DIRECT INVESTMENT » Strong and Rising FDI Stimulates Economic Prosperity VEST » Key Industries Benefit from FDI » Reinvestment 30% (2011) » Georgia has bilateral treaties on investment promotion and protection with the 32 countries (negotiations launched with 24 countries) FDI BREAKDOWN BY SECTORS 2011 FAVORABLE FDI/GDP RATIO ORGIA RGIA GIA A
  • 11. INVESTMENT OPPORTUNITIES IN GEORGIA IN HYDRO POWER HUB TOURISM MANUFACTURING IN GEO AGRICULTURE REGIONAL LOGISTICS CORRIDOR REGIONAL SERVICE HUB www.investingeorgia.org 10
  • 12. www.investingeorgia.org 11 HYDRO POWER HUB SIGNIFICANT HYDRO POWER POTENTIAL » Installed capacity of > 2,700 MW VEST » Additional potential > 4,500 MW Generation cost (0.06 USD) among the lowest in the region, ~50% lower than target market Turkey EXPORT CAPACITY » The only net electricity exporter in the region, with rapidly growing consumption rates » Construction of 400 kV power transmission line from Georgia to Turkey to be completed in 2013 ORGIA OPPORTUNITIES » Several large scale projects (> 100 MW) » ~ 70 small/medium projects (< 100 MW)
  • 13. OVERVIEW OF GEORGIA’S (HYDRO-) POWER SECTOR IN • Domestic: Demand growth and increasing share of renewables requires an extension of hydropower generation by around 65% STRONG DEMAND until 2020 GROWTH PROSPECTS • Export: Georgia is surrounded by countries with a projected structural power deficit (e.g. Turkey, Russia South) or expensive power generation, opening up attractive export opportunities IMPORTANCE OF • Power generation accounts for 3% of GDP and ~ 1% of THE SECTOR LOW IN employment but is of high strategic importance to Georgia TERMS OF GDP AND • ~ 10% of power production are exported, but Georgia still needs to EMPLOYMENT IN GEO import power during winter • Georgia boosts significant and economically viable HPP potential – POWER SECTOR WITH already today 75% of power generated via HPP (2,700 MW) – 25% STRONG FOCUS ON via thermal (mainly gas) COST COMPETITIVE HPP • All new HPPs operate in a liberalized market • Cost of hydropower generation is very competitive in the region • FDI inflows amounted to USD 200 million in 2011 and are growing LARGE PROJECTS HAVE • 65% of economically viable potential not yet exploited BEEN PLACED AND PIPELINE IS FILLED • Projects of up to USD 750 million have been concessioned to investors from e.g. India, Turkey, Czech Republic and other counties. • Pipeline well filled with several large scale projects (100-702 MW) as well as 70+ smaller projects www.investingeorgia.org 12
  • 14. www.investingeorgia.org 13 GEORGIA SURROUNDED BY COUNTRIES WITH A STRUCTURAL POWER DEFICIT OR EXPENSIVE POWER GENERATION V VEST • Turkey expected to have deficit of up to 80-120 TWh by 2020, with seasonality of its demand matching Georgia’s supply ORGIA R • Russia’s Southern districts will also experience a structural deficit of up to 40 TWh by 20201 • In other markets, Georgia’s hydropower is very cost-competitive compared to local tariffs2 1 Assuming current consumption and supply pattern 2 This does not even include countries with heavily subsidized electricity generation (e.g. Azerbaijan, Kazakhstan) STRUCTURAL DEFICIT BY 2020 NO DEFICIT, BUT CURRENT TARIFFS > AD HOC DEFICITS PROJECTED GEORGIA’S GENERATION COST NO DEFICIT, BUT SUBSIDIZED TARIFFS
  • 15. HYDROPOWER PIPELINE BOOSTS SEVERAL NEW MEGAPROJECTS ABOVE 100 MW CAPACITY THAT ARE CURRENTLY OPEN FOR INVESTMENT IN N PROJECT CAPACITY FORECAST INVEST. READY TO VOLUME INVEST? USD MILLIONS • NAMAKHVANI CASCADE 450 MW 926 • KHAISHI HPP 400 MW 620 IN GEO O • ONI CASCADE 270 MW 599 • NENSKRA HPP 210 MW 491 • TOBARI HPP 200 MW 310 • FARI HPP 180 MW 297 • LENTEKHI HPP 120 MW 189 • HYDROPOWER PIPELINE ALSO BOOSTS ~70 SMALL/MEDIUM PROJECTS (<100 MW CAPACITY) THAT ARE CURRENTLY OPEN FOR INVESTMENT www.investingeorgia.org 14
  • 16. www.investingeorgia.org 15 TOURISM FAST GROWING SECTOR • Tourism contributes 6.7 % of GDP VEST • Number of visitors increased 38% in 2011 reaching 2.8 million and 56% in 2012 reaching 4.4 million • Majority of visitors come from : Turkey (34.9%), Azerbaijan (21.2%), Armenia (20.5%), Russia (11.6%) Europe (9.4 %) • Average duration of stay - 9 days, the median visitor stays - 2days / Average spend of USD 330 • Overall capacity of < 15,110 rooms • Already operating international brand hotels - Sheraton, Radisson, Marriot, Holliday Inn, (under construction - Kempinski, Hillton) etc. ORGIA POTENTIAL • Youth Olympics in 2015 • Free tourism zones – summer resorts • Availability of gambling business – gaming is partially or completely banned in Russia, Ukraine, Azerbaijan, Kazakhstan,Turkey, Israel, Iran, Iraq • 8 national parks • 2400 springs of mineral waters
  • 17. GEORGIA IS EXPECTING SIGNIFICANT GROWTH TRAJECTORY IN TOURIST ARRIVALS IN INTERNATIONAL ARRIVALS HAVE SEEN ~40% YEAR-ON-YEAR GROWTH TOTAL INTERNATIONAL TOURIST ARRIVALS NUMBER OF ARRIVALS INTO GEORGIA IN GEO 5.5 4.4 2.8 2.0 1.3 1.5 1.0 1.1 0.6 www.investingeorgia.org 16
  • 18. www.investingeorgia.org 17 INTERNATIONAL LUXURY HOTEL CHAINS DOING WELL: MORE ARE COMING TO THE MARKET VERBATIMS OF INTERNATIONAL HOTEL BRANDS IN GEORGIA VEST UPCOMING INTERNATIONAL HOTEL HOTEL CHAIN HOTELIER’S ASSESSMENT OF PERFORMANCE BRANDS BEFORE 2015 “We have seen significant increases in occupancy rate and financials since 2010. This year [2012] high LOCATION season has seen a very promising start. We have advance reservations booked for almost the whole summer” – Omer Subasi BATUMI General Manager ORGIA “ We are very optimistic as demand has been increasing rapidly. Hotel occupancy hovers around TBILISI 85%. Our guests come from all around the world representing various sectors including business, sportmen and tourists” – Oto Berishvili Sales & Marketing Manager BATUMI “We have seen 7-8% more guests in our hotels every year. Business and leisure travelers are our two biggest client group and they come from all over the world. Best occupancy period is summer TBILISI from May to September” BATUMI – Alexander Kvaratskhelia Marketing Manager TBILISI
  • 19. INVESTMENT OPPORTUNITIES IN TOURISM SECTOR “SUN-BEACH” WINTER SKI SUMMER SPA RESORTS REGIONAL RESORTS RESORTS MOUNTAINS CASINO CITY IN RESORTS DESCRIPTION Expansion of Master development Four season resort Development of Spa Development of summer ”sun and of winter resorts value preposition Resorts large-scale beach” franchise with unique profile integrated casino focusing on high- equivalent to the complex to Serve end segment Alps regional markets. IN GEO • All inclusive • Government is • Majestic • Include hotels, • Include hotels, summer resorts fully committed landscapes Different casino • New master resort to provision allowing types of Clinics, entertainment, POTENTIAL LOCATION development of basic for a wide range fitness,Outdoor family Services infrastructure of summer activities and shopping tourism activities • Fiscal incentives such as trekking, available horse riding, bird watching and river racing • Batumi • Mestia • Mestia • Tskaltubo • Batumi • Anaklia • Gudauri • Gudauri • Akhtala • Tbilisi • Kobuleti • Bakuriani • Bakuriani • Other locations • Other locations • Other Black Sea • Goderdzi • Goderdzi locations • Kazbegi • Other locations www.investingeorgia.org 18
  • 20. www.investingeorgia.org 19 MANUFACTURING SECTOR OVERVIEW: OPPORTUNITIES: VEST • Manufacturing and industries account for around 14% • Large import overhang in goods that are usually of GDP and ~ 5% of employment not traded extensively provides regional import • Largest industries are food and beverages (3% of total substitution potential in food processing, construction GDP) and metal products (2.5%) materials, household gods etc • Advantage to process goods - competitive cost of • Georgia’s current advantages in terms of handling power, labor and strategic location large transshipment flows, business stability, low • 2 Free Industrial Zones - In FIZ, businesses are cost of power generation and existing raw materials/ exempted from all tax charges except Personal intermediate products provide opportunities for Income Tax large industrial bets, like production of iron and steel products, aluminum etc ORGIA Black Sea Kulevi Poti FIZ Mestia FIZ Kutaisi Russia Tbilisi Batumi Turkey MRN Azerbaijan Railway Armenia
  • 21. TRADE BALANCE IN GEORGIA AND IN THE REGION IMPORT OVERHANG, USD mln, 2011 mln, TRANSPORTATION IN COST IN GEO www.investingeorgia.org 20
  • 22. www.investingeorgia.org 21 SEVERAL HIGHLY ATTRACTIVE IMPORT SUBSTITUTION OPPORTUNITIES SECTOR PRODUCT GROUP PRODUCTS VEST • Articles of cement and steel • Prefabs Construction • Ready-mix concrete - Building • Bricks materials • Finished articles of steel • Articles of wood • Plywood and laminated wood • Tiles Construction • Ceramic products • Sanitary ware ORGIA - Finishing • Windows elements • Glass & glassware • Glassware • Furniture • Doors • Living furniture • Beverages and spirits • Bottling Food processing • Fruit juices • Preparations of fruits and vegetables • Jams • Vegetable oils • Dairy and eggs • Milk • Cheese • Butter • Yogurt • Meat • Poultry/Beef/Pork/Lamb Packaging • Plastic packaging • Paper packaging
  • 23. SEVERAL OPPORTUNITIES ARISING FROM GEORGIA’S TRANS-SHIPMENT FLOWS AND RESOURCES OPPORTUNITY CURRENT ADVANTAGES TO BE LEVERAGED POTENTIAL FOR GEORGIA IN ALUMINIUM INDUSTRY • Large transshipment flows of raw • Value chain integration materials/input (Bauxite) and aluminium - Production of aluminium cross Georgia to/from Tajikistan (largest - Production of aluminium aluminium plant in Central Asia) products (fabricated or end • A lot of water recourses and large products) hydropower plants in the pipeline IRON AND STEEL • Vertical integration of value chain • Georgia mines Manganese ore PRODUCTION by adding production of iron and • Georgia produces ferro alloys, largely for export (USD ~250 mn) steel and related end products IN GEO • Large imports of iron and steel products to • Regional import substitution Georgia (USD ~300 mn) and neighboring countries COPPER • Georgia and Armenia export copper ores, • Production of copper alloys copper waste and scrap and end products (regional import • Import overhang of copper products substitution) (alloys and final products e.g. wire, tubes, pipes) amounts to USD ~200 mn in the region POLYMERS & • Import overhang of plastic products • Plastics and petrochemicals OTHER PLASTICS amounts to 230 mn in Georgia and 8 bln in production (regional import the region substitution for plastics/rubber) • Georgia transships large flows of petroleum products www.investingeorgia.org 22
  • 24. www.investingeorgia.org 23 AGRICULTURE OVERVIEW: VEST • Over 21 micro-climates - a wide range of grain, vegetables, hard and soft fruits, meat and dairy could be farmed • Agriculture accounts for 9% of GDP. It contributes ~53% of employment mostly in subsistence farming (average farm size of 1.22 ha) • Traditionally Georgia has strengths in wine, nuts, fruits which account for more than 60% of agriculture exports • The average gross monthly salary in the agricultural sector in Georgia ORGIA is USD 220 OPPORTUNITIES: • Import substitution opportunities - meat, dairy products, onions, potatoes etc • Export opportunities - traditional strong sub-sectors, like wine, walnuts, hazelnuts, sheep meat, etc • Productivity gain opportunities – tomatoes, apples, cucumbers, stone fruits, citrus etc
  • 25. 14 POTENTIAL PRIORITIES CROPS/LIVESTOCK TO FOCUS DEVELOPMENT EFFORTS HIGH POTENTIAL PROJECTS GEORGIA’S COMPETITIVENESS IN ▪  ▪  ▪  ▪  ▪  ▪  IN GEO ▪  ▪  ▪  ▪  ▪  ▪  ▪  ▪  www.investingeorgia.org 24
  • 26. www.investingeorgia.org 25 REGIONAL COMPETITIVENESS AND POTENTIALS MAP VEST C O O CROP POTENTIALS BY REGION S GO ORGIA BASED ON REGIONAL SPECIALIZATION (NATURAL ENDOWMENTS, CULTIVATION HISTORY), PRODUCTIVITY AND SEASONALITY
  • 27. REGIONAL LOGISTICS CORRIDOR IN TRANS-CAUCASIAN ROUTE • Latent gateway between Europe and Central Asia • Around 80% of port cargo and 60% of freight rail are transits TRANSPORT INFRASTRUCTURE • Rapidly developing road infrastructure IN GEO • Ports are cost-competitive vs. alternative routes • FDI inflows in the logistics sector have primarily targeted transport infrastructure OPPORTUNITIES • Deep-sea port with PanaMax vessel • Containerization and logistical centers • Direct connection with European and Central Asian railway networks www.investingeorgia.org 26
  • 28. www.investingeorgia.org 27 GEORGIA’S TRANSPORT INFRASTRUCTURE MODE OF TRANSPORT EXISTING INFRASTRUCTURE UPGRADES AND FLOWS VEST RAIL RAIL • 1,500 km (90% electrified) • BTK connection to Turkey Road/Rail • ~7,000 rolling stock, 180 locos • Modernization ROAD • Tbilisi bypass • 1,500 km international road • ~2500 new rolling stock + 20,000 km internal and local roads ROAD • East-West highway upgrade POTI SEAPORT POTI SEAPORT ORGIA RGIA • 13 berths, 8-10m depth • New container berth (2014) • Container and bulk (210k TEU) • Owned/operated by Maersk/RAKIA DEEP-SEA PORT Maritime BATUMI SEAPORT • Min. 2 berth of 20m depth • 5 berths, 1 offshore mooring, 11m depth (PanaMax) • 90% petroleum/oil, 10% containers (44k • First phase: Dry bulk (10m tons) TEU) and containers (200k TEU) • Operated by JSC KazTransOil • USD 200 mn investment KUHLEVI SEAPORT volume • Crude oil, petroleum, and lubricants • Owned/operated by State Oil Company Azerbaijan TBILISI INTERNATIONAL AIRPORT KUTAISI INTERNATIONAL AIRPORT Air • ~1 mn passengers (capacity: 3 mn) • Serving 28 destinations • Passenger, incl. low-cost BATUMI INTERNATIONAL AIRPORT airlines • 100,000 passengers • Currently under construction
  • 29. CARGO TURNOVER TRANSIT FLOWS THROUGH THE CORRIDOR CENTRAL ASIA (MILLION TONS PER YEAR) Kazakhstan IN Uzbekistan Tajikistan Kirgizstan Turkmenistan CAUCASUS: Azerbaijan Armenia APPROXIMATELY 80% ARE TRANSIT FLOWS Europe+Turkey Sender - 2.6 IN GEO Destination - 4.1 Total - 6.7 Central Asia+Caucasus Sender - 9.6 Destination - 4.7 Total - 14.3 www.investingeorgia.org 28
  • 30. www.investingeorgia.org 29 ANNUAL CARGO FLOW OF CAUCASUS & CENTRAL ASIA EXPORT VEST EU 22% IMPORT ORGIA A EU 1 U 15% Other Regions 78% Other Regions 85% 8 Export I Import t G dT t l Grand Total TOTAL 255 ml. ton 68 ml. ton 323 ml. ton EU 56 ml. ton 10 ml. ton 66 ml. ton *Source : IGC TRACECA
  • 31. GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED REGION BOOSTING SIGNIFICANT RESOURCE RESERVES IN IN GEO O FOR COMPARISON: REGION REPRESENTS ONLY ~1.6% OF GLOBAL POPULATION www.investingeorgia.org 30
  • 32. www.investingeorgia.org 31 GEORGIA IS IN A HIGHLY STRATEGIC LOCATION FOR TRANSSHIPMENT VEST STRATEGIC LOCATION: IT SERVES AS AN ENTRY GATE TO THE CAUCASUS AND CENTRAL ASIA AS WELL AS A STEPPING STONE TO THE REGION LEVERAGING ITS LOCATION, GEORGIA’S TRANSPORT ECONOMY CAN BENEFIT ORGIA FROM LARGE ADDRESSABLE TRANSIT FLOWS, GROWING ECONOMIES AND LANDLOCKED RESOURCES THE SHORTEST ROUTE BETWEEN EUROPE AND CAUCASUS/CENTRAL ASIA GREAT POTENTIAL OF BETTER INTEGRATION AND DEVELOPMENT OF THE REGION
  • 33. REGIONAL SERVICES HUB • Georgia’s service sector achieves leading ranks IN among regional economies in terms of value added and trade • Services have major share of FDI inflow of 45% in 2011 with USD 500 million: » Financial services have grown at 19% p.a. since 2009 and is the leading service sub-sector for FDI attraction with 15% of total inflows in 2011 IN GEO » Consultancy services attracted 12% of total FDI inflows in 2011 » Wholesale/retail trade accounts for 40% of service GDP, and strong FDI inflows rebound at 48% p.a. since 2009 » FDI inflows in healthcare/social work have grown at 146% p.a. since 2007 • OPPORTUNITY TO CAPITALIZE: » Financial services/headquarters » Retail hub as the destination-of-choice for shopping www.investingeorgia.org 32
  • 34. www.investingeorgia.org 33 OPPORTUNITY TO POSITION GEORGIA AS A REGIONAL RETAIL DESTINATION VEST ST GEORGIA - REGIONAL RETAIL HUB Vision is to develop mega malls in key locations to transform Georgia - into the regional retail hub leveraging high traffic of foreign tourists and strategic geography BATUMI TBILISI ORGIA GIA Benefits of destination mega mall development • Complement overall tourism strategy with solid retail value proposition • Retail magnet for foreign tourists and affluent local with longer duration of Tbilisi and Batumi as most potential locations • Established tourist destinations with 80% • of foreign tourist traffic in Georgia Accessible with existing international airports and major transnational highway/ railway visit (1/2 to 1 day), higher share of wallet, • Solid retail, hospitality and other and repeated visits supporting services infrastructure • Presence of flagship brands will drive retail • Integration with other tourism offerings brand cluster growth e.g. sun & beach, casino • Easier to drive investments
  • 35. GEORGIAN NATIONAL INVESTMENT AGENCY IN • State agency - Promoting Georgia internationally - Supporting foreign investments and investors before, during & after investment process • “One-stop-shop” for investors INVESTORS IN GEO • Moderator between Investors, Government and Local Companies LOCAL GNIA COMPANIES GOVERNMENT Mission - Attracting Greenfield and M&A Investments www.investingeorgia.org 34
  • 36. www.investingeorgia.org 35 WHAT YOU CAN GET FROM GNIA VEST » INFORMATION • General data • Statistics • Sector Researches » COMMUNICATION ORGIA • Access to Government of Georgia at all levels • Local partners (Business Associations, private companies) » ORGANIZATION OF SITE VISITS AND ACCOMPANYING INVESTORS » AFTER CARE • Legal advising • Supporting services
  • 37. INVEST IN GEORGIA GEORGIAN NATIONAL INVESTMENT AGENCY www.investingeorgia.org E-mail: enquiry@investingeorgia.org