DOING BUSINESS WITH WHY? WHERE? HOW?
GEORGIA: COUNTRY OVERVIEW ▪ Area: 69, 700 km 2 ▪ Population: 3, 7 mln ▪ Budget deficit: 3, 2% of GDP ▪ Inflation rate: 4% ▪ Capital: Tbilisi (1, 1 mln population) ▪ Total Public Debt to Nominal GDP: 41, 5% ▪ GDP: 13, 9 bln USD ▪ Unemployment: 12, 4% ▪ GDP per capita: 3743 USD ▪ Foreign Direct Investment: 1, 35 bln USD ▪ Budget revenue: 8, 5 bln GEL ▪ Foreign Trade: 9, 9 bln USD
GDP STRUCTURE 2015
FDI STRUCTURE 2015 * EU – 37%
BILATERAL TRADE BETWEEN GEORGIA AND LATVIA Year TRADE (mln USD) EXPORT (mln USD) IMPORT (mln USD) 2014 28, 4 8 20, 4 2015 26, 2 6, 3 19, 9 2016 (I-III Q) 25, 2 4, 1 20, 1 # Trade Partner Most popular export product Georgia # 56 (for Latvia) Wine - 36, 6% of all export (Ge Latvia # 40 (for Georgia) Medicine - 18, 8% of all export
INVESTMENT FROM LATVIA 2014 2015 8, 1 mln USD 7, 1 mln USD Financial sector – 44, 5% Real estate – 65, 7% Other sectors (education, social and personal, utility) – 35, 3% Financial sector – 24, 1% Agriculture, fishing - 17, 3% Transports and Communications – 3, 4% Transports and Communications – 1, 3% Construction – 2, 5% Construction – 1, 2% Agriculture, fishing – 2, 4% During first 2 Q of 2016 the investment was 5, 5 mln USD
WHY? » POLITICALLY STABLE AND GROWING INVESTMENT AND BUSINESS DESTINATION Since 2010: GDP increase by 26%, FDI increase by 66%, Volume of Trade increase by 26% 2016 (I-VI) FDI amounted to USD 834 million: 11% up from the same period of 2015.
WHY? » DOING BUSINESS IS EASY – SIMPLE TO OPEN AND OPERATE ▪ Number 1 country for reforms during last 12 years (WB) ▪ Less bureaucracy – few procedures ▪ Cheap – opening of a company within 24 h costs 8 €, on the same day 19 € ▪ Opening of a company and owning a real estate is allowed for non-residents, without restrictions ▪ Opening of a bank account – 1 day
WHY? » DOING BUSINESS IS EASY – SIMPLE TO OPEN AND OPERATE Indicator/ DB 2017 Time, days Number of Procedures Doing business 2016, Rank Starting Business 1 2 8 Registering Property 1 1 3 Dealing with Construction Permits 48 7 8
WHY? » EFFICIENT, PRO-BUSINESS AND CORRUPTION-FREE GOVERNMENT Ease of Doing Business (2017, WB) Index of Economic Freedom (2016, HF)
WHY? » EFFICIENT, PRO-BUSINESS AND CORRUPTION-FREE GOVERNMENT Global Corruption Barometer Percentage of users paying a bribe to tax authorities in the past year Percentage of users paying a bribe in registry and permit services
WHY? » INCREASE OF MARKET SIZE BY FREE TRADE AGREEMENTS § EU Association Agreement signed in 2014 (includes the DCFTA) § EU became Georgia’s 1 st trade partner § Georgia is expecting Visa Free regime with the EU in the nearest future
WHY? » INCREASE OF MARKET SIZE BY FREE TRADE AGREEMENTS ▪ Access to 2, 3 billion market without customs duty. Free trade agreements with the EU, EFTA, China, Turkey, Ukraine, CIS countries ▪ Simplified trade regime with USA, Canada, Japan, Norway and Switzerland, additional 500 million consumer market ▪ Working on free trade agreements with the USA ▪ Member of WTO ▪ Customs clearance in 15 minutes ▪ 80% of goods free from import tariffs
WHY? » TAXATION – LOW, SIMPLE, FAIR Taxes Total number Before Current 21 6 12 -20% Social Tax 33% - Corporate Profit Tax 20% 15% Value Added Tax 20% 18% Personal Income Tax Excise Tax Property Tax Customs/Import Tax Depending on type of goods Up to 1% 0%, 5% or 12% ▪ No social tax, capital gains, wealth or inheritance tax ▪ Taxes can’t be increased without national referendum ▪ Total tax rate – Georgia ranks number 9 out of 140 countries ▪ Dividend tax only 5% *Micro-enterprise company tax 3 -5% *Corporate income tax will be applied to distributed profit; undistributed profit reinvested in a company will not be subject to income taxation
WHY? » STABLE FINANCE AND BANKING SECTOR BB- Stable 14 international banks 6 local banks Ba 3 Positive
WHY? » COMPETITIVE LABOUR FORCE ▪ Young force – 50% of unemployed population are aged between 20 -34 ▪ Flexible labor code – all ILO core conventions are ratified by Georgia ▪ Average salary in 2014 – 490 USD ▪ Vocational Education Training Centers around Georgia
WHY? » NEW SILK ROAD CONCEPT – UNIQUE OPPORTUNITIES FOR BUSINESS § Georgia is a geopolitical and geographical hub that connects Europe and Asia § It is among the countries of a historical “Silk Road” route § On 15 -16 October 2015, Tbilisi hosted a Tbilisi Silk Road Forum
WHY? » ECONOMY’S DEVELOPMENT PLAN 4 -point reform plan of the Government of Georgia ▪ Improvement of business environment : In case of reinvesting the income, the enterprises will be exempt from the corporate income tax. ▪ Open governance and inclusiveness enhancement : The Business House – a unique platform encompassing the delivery of more than 600 types of public services in one building. ▪ Development of the framework infrastructure: Construction and modernisation of highways and railway, connecting Georgia’s regions and ensuring speedy transit and increasing its capacity. ▪ Higher education reform: Public financing of the most needed professions requested by certain industries in the nearest 5 years.
DOING BUSINESS WITH GEORGIA » WHERE? • Energy sector • Hospitality and Real Estate • Manufacturing • Agriculture • Regional Logistics and Services Hub
WHERE? » ENERGY SECTOR ▪ The second richest hydro resources per capita in the world; only 20% of total hydro potential is utilized ▪ Energy generation cost is the lowest in the region ▪ Well-developed power transmission infrastructure, linking the country with all neighbors ▪ 6 big (more than 100 MW) HPP projects on the pre-feasibility study level (installed capacity of 2, 950 MW) ▪ 15 HPP projects are under construction and 15 HPP projects are awaiting permits (installed capacity of 1, 900 MW)
WHERE? » ENERGY SECTOR International projects ▪ The Western Route Export Pipeline (Baku-Supsa Oil pipeline) ▪ Baku-Tbilisi-Cayhan oil pipeline ▪ The South Caucasus Pipeline (natural gas pipeline)
WHERE? » HOSPITALITY AND REAL ESTATE ▪ Fast growing sector ▪ No real estate ownership restrictions ▪ Very low crime-rate ▪ Rich natural and cultural resources ▪ Continuous increase of international visitors (10 times increase since 2005) International travelers (mln)
WHERE? » HOSPITALITY AND REAL ESTATE
WHERE? » HOSPITALITY AND REAL ESTATE ▪ Winter Resorts: Mestia, Gudauri, Bakuriani, Goderdzi ▪ “Sun-Beach” Resorts: Batumi, Gonio, Anaklia, Kobuleti & others ▪ Four Season Resorts: Mestia, Gudauri, Bakuriani, Goderdzi, Kazbegi ▪ Medical & Wellness Resorts: Tskaltubo, Akhtala, Borjomi, Abastumani ▪ Gambling: Tbilisi, Batumi
WHERE? » MANUFACTURING ▪ 11% of GDP ▪ 5% of employment with average salary of 410 USD ▪ 2 Free Industrial Zones (In FIZ businesses are exempted from all tax charges except Personal Income Tax) ▪ High Technology and Innovation Development Center (Tbilisi) – advanced laboratory equipment, development of innovative projects ▪ Highly attractive regional production opportunities: chemicals, plastics, construction-building materials and finishing elements ▪ Production/Export of copper ores and waste, scrape, ferro-alloys ▪ Regional import substitution opportunities – iron, steel, aluminum and copper products
WHERE? » AGRICULTURE AND FOOD PROCESSING ▪ 9, 2% of GDP; 1, 5% of FDI; 17, 5% of trade volume ▪ Average salary 305 USD ▪ 22 micro-climates from cool and dry to warm and humid - this results in a longer harvesting season and a wide range of growing conditions ▪ Main export products: ▪ Wine and other alcoholic beverage accounts 35% of agriculture exports ▪ One of the global exporters of nuts, ideal growing conditions, commitment from Ferrero ▪ Well-reputed for lamb quality, significant export potentials to Middle Eastern markets
WINE MAKING – GAUMARJOS!
WHERE? » AGRICULTURE AND FOOD PROCESSING § Other export opportunities – citruses, fruits, sheep meat, etc; § Opportunities for processing – tomatoes, apples, cucumbers, potatoes, stone fruits, citrus, olive oil, etc; § Import substitution opportunities – poultry, beef, port, dairy products (milk yogurt, butter), etc.
WHERE? » REGIONAL LOGISTICS CORRIDOR & SERVICES HUB ▪ Natural gateway between Europe and Central Asia ▪ Up to 60% of overland international freight are transits ▪ Rapidly developing road infrastructure ▪ Ports are cost-competitive compared to alternative routes ▪ Services account 53% of GDP ▪ Opportunity to capitalize: IT/BPO services; regional headquarters; retail hub as the destination-of-choice for shopping ▪ Construction, Transports and Communications were the highest contributors to FDI with 50% of total inflow ▪ Services have a major share of FDI inflow - 73%
HOW? » ACCESS TO FINANCE AND INCENTIVES & CONSULTING Valuable Partner Companies PARTNERSHIP FUND www. fund. ge GEORGIAN ENERGY DEVELOPMENT FUND gedf. com. ge PRODUCE IN GEORGIA qartuli. ge AGRICULTURE PROJECTS MANAGEMENT AGENCY apma. ge GEORGIAN CO-INVESTMENT FUND www. gcfund. ge GEORGIAN NATIONAL INVESTMENT AGENCY www. investingeorgia. org
SUCCESS STORIES » ANAKLIA DEEP SEA PORT ▪ 1, 5 bln USD investment capability ▪ Berths for Pana. Max and larger sizes ships ▪ Annual cargo turnover: in 3 years – 7 million tons; in 12 years – 100 million tons
SUCCESS STORIES » IRON SILK ROAD KARS-TBILISI-BAKU t ▪ Initial annual volume 6, 500 million tons annually ▪ The 1 st train from China has already arrived on 13 December, 2015! ▪ 4 times faster and cheaper than other routes from China to Europe
SUCCESS STORIES » 280 MW HPP “NENSKRA” ▪ Project of Georgian Partnership Fund and Korean company “K Water” ▪ Potential generation of electricity is going to be 1. 2 billion kw/h ▪ Total investment amounts 1 billion USD
ADDRESS: RAINA BULVARIS 3, RIGA TEL: 67 -213136 EMAIL: RIGA. EMB@MFA. GOV. GE WWW. LATVIA. MFA. GOV. GE FACEBOOK: EMBASSY OF GEORGIA TO LATVIA
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