Investment Climate &Opportunitiesin Georgia
July, 2010
GEORGIAN NATIONAL INVESTMENT AGENCY

10 Reasons to Invest in Georgia
1. Worldʼs Leading Reformer
2. Strategic Geographic Location
3. Stable Macroeconomic Environment
4. Liberal Trade Regimes
5. Low Taxes
6. Simplified Licensing and Permitting Procedures
7. Developing Infrastructure
8. Business Friendly Environment
9. Worldʼs Leader in Labor Freedom and Labor Force Literacy
10. Diverse Investment Sectors

Worldʼs Leading Reformer
Georgia is the worldʼs leading reformer. Its meteoric
progress in improving business climate has been welldocumented in a number of international indices.
• The World Bank hailed Georgiaʼs commitment to reforms over thepast four years as unprecedented after the country rose from112 th to 11th place in the world in the World Bankʼs DoingBusiness 2010 survey.
• Doing Business Reformer Club
awarded Georgia as Top
Reformer in Europe and Central Asia during last five years.
• According to Heritage Foundationʼs Index of Economic Freedom
2010, Georgia ranks 26 th out of 157 countries in the world,
surpassing such highly developed European countries as Norway,Czech Republic, France, Latvia, etc.

2. Strategic Geographic Location
Located at the crossroads of Europe and Central Asia, Georgia is a bridgeconnecting several important economic regions with a total of 827 millionpeople. It is a key link in the shortest transit route between Western
Europe and Central Asia for transportation of oil and gas as well as drycargo.

3. Stable Macroeconomic Environment
Consistentmacroeconomicpolicies,
burstofentrepreneurial activity, growth in domestic consumption,
rehabilitation of infrastructure and export growth areproducing strong economic growth.
• Real GDP growth averaged 8.5% before the crisis. In 2007
it exceeded 12%.
• Georgia has proved to be highly resilient to external
shocks (for example, energy and commodity prices,
Russian embargo, Russian-Georgian conflict, global
financial & economic crisis).

Stable Macroeconomic Environment

Comments

 Boosted by non-stop economic reforms and substantial FDI inflows, Georgiaʼs
economy continues to show a moderate growth regardless of Russian-Georgian
Conflict and worldwide financial crisis, showing strong resilience against global
challenges
 Georgiaʼs economic performance in 2006 and 2007 is particularly impressive,
taking into consideration the consecutive external shocks (Russian embargo in2006, rising commodity prices) and tight monetary policy

4. Liberal Trade Regimes
Georgia has low tariffs, streamlined border clearance
procedures and preferential trade regimes with major
partners including the European Union, the CIS countries,Turkey,USA, Japan and Canada Main Features of Georgian Trade
Foreign Trade Relations• WTO member since 2000. MFN Tariffs
with WTO Members• Georgia benefits from a Generalized
System of Preferences (GSP) when
trading with USA, Canada, Switzerland,
Japan and Norway• GSP+ status with EU allows Georgia toExport 7200 products to EU market
duty free• Free Trade Regime with CIS Countries
and Turkey (since November 1,2008)• Georgia is actively working with the EU
and the USA to encourage free tradenegotiations

Policy•Low import tariffs (90% of goods
free from import tariff)•

Few export/import licenses andpermits•

No quantitative restrictions onimport and export•

No customs tariff on export and reexport•No VAT on export•

Simplified export and importprocedures

5. Low Taxes
The taxation framework in Georgia is asfollows: 20% flat personal income tax
decreasing to 15% by 2012
 18%VAT 15% corporate income tax

 5% interest income and dividend tax
rates decreasing to 0% by 2012
 1%(max) property tax on the selfassessed value of property
 0% dividend income tax on dividends
from publicly-traded equities from 1January 2009
 0% tax on interest income from bankdeposits and publicly-traded debt
securities (from 1 January 2009) 0% capital gains tax
 0% social insurance or similartaxes
 0% inheritance tax
 0% wealth tax
 0% stamp duty or othertransaction-based taxes or levies
Free Industrial Zone:
 0% VAT 0% customs tax
 0% property tax

Free Industrial Zones
LEGAL FRAMEWORK FOR CREATION OFFIZ

 Creation of FIZ is regulated by the Lawof Georgia on Free Industrial Zones

 The

aim of the this Law is to provide
favorable environment for the economic
activity and to promote the inflow ofcapital and technologies to Georgia
 FreeIndustrial Zone may be set up on
any territory exceeding 10 hectares,
except for the protected territories under
the Georgian Law
Type of Tax

Free IndustrialZone

Free WarehouseCompany

Corporate Income
Tax0%(int.companies)

0%(from re-exporting offoreign goods)

Value Added Tax

0%0%

Customs Tax

0%0%

Property Tax0%up to 1%

Personal
Tax

20%20%

IncomeCREATION OF FREE INDUSTRIAL ZONE Free

Industrial Zone may be

set up:By the initiative of the Governmentof Georgia upon request of physicalperson or legal entity(organizer)

 The creation of Free Industrial

Zone
necessitates
thattheOrganizer presents a guarantee(the amount and conditions of which shall be
determined by a resolution of the Governmentof Georgia on the rules for creation,
arrangement and functioning of Free IndustrialZone) Decision on the creation of Free

Industrial Zone is made by theGovernment of Georgia

6. Simplified Licensing and Permitting
ProceduresGeorgia has dramatically simplified licensing andpermitting requirements to ease constraints on business.
 The total number of licenses and permits was reduced by 84%.
 Licenses and permits may be required only for:• Safety and health protection• Security of living conditions and cultural environment of individuals• Protection of state and public interests
 Reduced statutory time limits for government action: 30 days for issuinglicenses and 20 days for issuing permits.
 “Silence is consent” ‒ a permit or license is automatically granted if nogovernment action is taken within statutory time limits.

7. Developing Infrastructure
Georgian infrastructure,
2008

The MIN at a Glance
Gantiadi2

Number of Int. Airports
Number of Sea Ports

RussiaGeorgian Road,
2008

Larsi
ZugdidiKuleviBlack Sea

Roki

SenakiTerjola

Gori

KhashuriTbilisi
BypassSamtredia

Sarpi
MRN

TurkeyRailway
Railway – under construction
International Airports
Inoperative Airports

International

1495 KM

Internal3354 KM

Local

15480 KM

Total

20329 KM

Kutaisi

Poti

Batumi3

Akhaltsikhe

Tbilisi

Lagodekhi

Red bridge

Akhalkalaki

Partskhisi
Ninotsminda

Vale

Kartsakhi

Telavi

Guguti
Zhdanovi

Sadakhlo
Armenia

Azerbaijan

8.Business Friendly Environment
Number of registered businesses

Number of registered businesses per 100
adults

Source: Ministry of FinanceSource: World Bank report - Doing Business 2010

Source: World Bank - Doing Business 2008

.
9.Worldʼs Leader in Labor Freedom andLabor Force Literacy
Georgia is the worldʼs leader in labor
freedom and offers a qualified labor force.
•Georgia has the most liberal Labor Code worldwide, according to theHeritage Foundation 2008.

•Labor Freedom Index for Georgia is 99.9 while the world average isabout 60, according to the Heritage Foundationʼs Index of Economic
Freedom for 2008.

•

Georgia leads the world on the Adult Literacy Rate indicator of the2006 Human Development Report produced by UNDP.

•

Georgia has a score of zero in difficulty of the hiring & firing indices,
according to the World Bank Doing Business Survey 2008.

•No minimum wage regulations.

10. Diverse Investment Sectors
FDI by Sectors

Banking; 0.5
Otherservices; 18.1

Selected Strategic Investors

Agriculture;
0.5
Industry;
13.3

Energy; 18.9

Real estate;
17.8

Construction;
3.6

Transport andcommunications; 27.0

Source: Department of Statistics of Georgia

Net FDI inflows

Source: Department of Statistics of Georgia

Diverse Investment Sectors• Up to 300 institutional investors invested in Georgian debt and equities in2004-2008

LOCAL

EUROCLEARetc
ONLY

EQUITY

DEBTWhere to invest
 Banking & Finances – resilient and growing
 Free Industrial Zones - the first Free Industrial Zones in the Caucasus
region Agriculture – endless potential
 Tourism – a whole new holiday destination
 IT & Telecommunications – next big thing Energy – untapped export potential
 HealthCare & Pharmaceuticals – quickly modernizing
 Real Estate - the most rapidly growing industry of the Georgianeconomy

Georgian National Investment
Agency Who we are:•

The sole public agency responsible for promoting and facilitating
foreign direct investment in Georgia•

A true One-Stop Shop for comprehensive information on
investment opportunities in Georgia•

The number one local partner for investors What we do:• Promote Georgiaʼsopportunities abroad

investment• Provide assistancebusinesses

andclimate

informationalandsupport

investment
toforeign• Liaise between foreign businesses and the Government ofGeorgia and/or local businesses

Georgian National Investment Agency - Export
Promotion• From February 2010, the Georgian National Investment Agency(GNIA) was made responsible for export promotion.
• By giving this function to GNIA, Georgian exporters and producers
will have a reliable supporter and guide in the mission of Georgian
export development
Key Functions• Informational support of Georgian producers and exporters• Facilitation of business contacts between local producers andforeign buyers• Promotion of Georgiaʼs export potential internationally• Increase of the export potential of Georgian producers

Contacts
Mr. Irakli Matkava
Director+99532 433 433
i.matkava@investingeorgia.org

GEORGIAN NATIONAL INVESTMENT
AGENCY
12, Chanturia Street, 0108 Tbilisi, Georgia
Tel/Fax: (+995 32) 433 433(+995 32) 10 63 91
E-mail: info@investingeorgia.org