Georgia’s economic policy is oriented toward free, fair, inclusive and sustainable development, resulting in effective public services, open and fair market competition, the protection of property and intellectual rights, and freedom of access to a free judiciary.
The country’s strategic location at the crossroads between Europe and Asia gives Georgia many advantages for import and export activities, international business and foreign business investments. Here are five key aspects why Georgia is attractive for investors.
With a range of free trade agreements, Georgia offers customs tax-free access to 2.3 billion consumers, including in the European Union, China (including the Special Administrative Region of Hong Kong), Turkey, Ukraine, the Commonwealth of Independent States (CIS) and the European Free Trade Association (EFTA) states. Besides these, the country enjoys Generalized Scheme of Preferences (GSP) regimes with the USA, Canada and Japan – an additional market of 490 million consumers.
The predictable political and investment climate is ensured by the Association Agreement with the EU. The political system boasts an open democracy and has demonstrated the effective transition of governments with consistent commitment to economic liberalization and European integration.
The country provides investors with a young, skilled and competitively priced labor force. The average monthly salary in Georgia amounts to 400 euros, which includes blue- and white-collar workers, as well as C-suite executives.
Through anti-corruption legislation, effective law enforcement and free access to online registries, the Georgian economy promotes transparency and a smaller bureaucratic burden. Georgia ranks seventh out of 190 countries in terms of ease of doing business, according to the World Bank’s Doing Business 2020 study. Georgia has one of the lowest tax burdens in the world, with simple and service-oriented procedures. There are just six flat taxes at low rates. The corporate profit tax on retained profit is 0%.
According to the World Bank’s Enterprise Surveys, customs clearance in Georgia takes only 20 minutes and 80% of goods are free from import tariffs with no quantitative restrictions. The average time it takes to obtain an operating license is 4.5 days, while in the wider region it takes 23.8 days, and worldwide 28.3 days.
The same institution listed Georgia among the top 10 least corrupt countries out of 144 and singled it out for its improvement in the global Corruption Freedom Index. Just one example: The percentage of companies in Georgia that have experienced at least one bribe payment request is 1.3%, while the mentioned indicator reaches 10% in European and Central Asian countries and 12% worldwide.
Georgia offers attractive investment opportunities in the following sectors:
The hospitality and real estate industry represents one of the most promising economic sectors, which is fueled by consistent growth in tourist numbers. The government is actively working to develop various resort destinations and offers excellent opportunities to potential investors regarding hotel infrastructure development, medical tourism and wellness destinations.
The government aims to further strengthen the country’s transit function and form a logistical hub in the region. Georgia has four seaports and three international airports, as well as rapidly improving road and rail networks.
Georgia provides significant investment opportunities in the manufacturing industry. Regarding sub-industries – there are attractive investment opportunities in light and heavy industries such as apparel and textile manufacturing, transport and electrical parts, construction materials, paints, washing materials, pharmaceuticals etc.
The energy sector is full of opportunities for investors. The country has great potential for renewable energy: Georgia is among the top countries in terms of water resources per capita and only 20% is utilized. The country also has high potential for wind and solar energy production.
Furthermore, the government offers a number of support mechanisms to companies which are interested in investing. The state agency Enterprise Georgia provides full support to businesses at various stages of operation from the market entry stage to investment aftercare. The state-owned Partnership Fund provides equity financing to financially viable projects in order to decrease the country risks for foreign investors and acts as a sleeping partner with a predetermined, clear exit strategy.
Despite the negative impact of the Covid-19 pandemic on Georgia’s economy, the positive trend in its ratings by international institutions continues:
Fitch Ratings left the sovereign credit rating for Georgia unchanged at BB.
Moody’s Investors Service affirmed Georgia’s Ba2 rating with a stable outlook.
The country’s rating from Standard and Poor’s is BB Stable.
The Heritage Foundation puts Georgia in 12th place out of 180 countries worldwide and sixth in Europe, in its Index of Economic Freedom 2020.
David Dondua is the ambassador of Georgia to the Hellenic Republic.