Investment Climate & Opportunities in Georgia• Strong and Rising FDI Stimulates Economic...

Investment Climate &Opportunities in Georgia

Georgian National Investment Agency(GNIA)

2012

Why Georgia is different

www.investingeorgia.org 2

Georgia’s transformation into the rapidly developing economy implied several key sets of reforms

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

Efficient, pro-business and corruption-free government No criminal Solid sovereign balance sheet Stable and conservatively managed banking sectorMulti-modal maritime, land and air access infrastructure for trade, logistics and

manufacturing Stable and competitively priced energy supply Flexible labor legislation

Number 1 Reformer in the world over the past 5 years – World Bank

Georgia - Sovereign Credit Ratings


BB- Stable(Upgraded from B+

Positive in November 2011)

BB- Stable(Upgraded from B+

Positive in December 2011)

Ba3 Stable(Affirmed in August

2012)

Doing Business in Georgia

1479

203234

4967

7191

112137

SingaporeUnited States

United …GEORGIA

GermanyArmenia

FranceKazakhstanAzerbaijan

TurkeyChina

RussiaUkraine


Ease of Doing Business Index Of Economic Freedom

Source: World Bank, 2012 (Rank out of 183 countries)

11014

2634

396567

7391

138144

163

Hong KongUnited States

United KingdomGermany

GEORGIAArmenia

KazakhstanFranceTurkey

AzerbaijanChina

Russia

Source: The Heritage Foundation, 2011(Rank out of 183 countries)

Up from 112 in 2005 Up from 99 in 2005

Country's impressive progress in improving business climate has been well

documented in a number of international indices.

Corruption Free Country


Global Corruption Barometer

0%1%1%

2%2%2%2%

3%5%

7%9%9%

22%26%

DenmarkNorway

UKSwitzerlandNetherlands

Korea …Germany

GEORGIAUnited States

FranceAustria

SingaporeArmenia

RussiaSource: Transparency International, 2011 (Rank out of 183 countries)

Percentage of users paying a bribe to receive attention from in the past 12 months

Georgia today is essentially a corruption-free investment destination where rule of law have been given the right way

3%

26%

16%

35%

78%

77%

% of survyed who claim that the level of corruption has decreased in the past three years

% of survyed who assess their current

government's action as effective in the fight against

corruption

Georgia Western Balkans+Turkey EU

Manufacturing 17,3%

Trade 17,3%

Public Administration

11,7%

Transport & Communication

s 10,6%

Agriculture 9,3%

Healthcare & Social

Assistance 6,1%

Construction 6,2%

Education 4,5%

Other sectors 16,9%

2 966 3 2423 644

4 0404 677 4 906 4 767 5 064

5 4915 929

6 388

919 1 188 1 484 1 7642 315

2 9212 455 2 623

3 2153 549

4 007

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2003 2004 2005 2006 2007 2008 2009 2010 2011P 2012F 2013F

US$

GDP per capita (PPP) Nominal GDP per capita (US$)

4,05,1

6,47,8

10,2

12,810,8

11,614,4

15,917,911,1%

5,9%

9,6%

9,4%

12,3%

2,3%-3,8%

6,3% 7,0% 6,0%6,5%

-6%

-3%

0%

3%

6%

9%

12%

15%

02468

1012141618

2003 2004 2005 2006 2007 2008 2009 2010 2011P 2012F 2013F

Nominal GDP (US$bln) Real GDP growth, y-o-y (%)

Steeper Than Expected Growth TrajectoryBroad-based and diversified nominal GDP structure 2011

Source: Geostat, MOF, IMF

Source: Geostat

Source: Geostat, MOF

Economic Structure and Trends


Rapidly growing GDP per capita – PPP and NominalGDP: strong rebound in 2010 after a relatively small contraction in 2009, robust growth potential

Initially planned at 5.5%, Georgia’s real GDP growth for 2011 was 7%, driven by strong real and financial sector activity, robust tax intake, and reassuring proxy indicators to economic activity

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

• Highly diversified trade structure

• Preferential Trade Regimes:

FTA with CIS countries: Ukraine, Belarus, Azerbaijan, Armenia, Russia, Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan

FTA with Turkey

DCFTA with EU will be signed next year

Negotiation on FTA with USA is in progress

GSP+ with EU - 7200 products to the EU market duty free

GSP with USA, Norway, Switzerland, Canada, Japan - lower tariffs are applied on 3400 goods exported from Georgia to these countries

Member of WTO

• Very simple and service oriented customs policy and administration

• Almost no custom duty - 90 percent of goods free from import tariffs

• No quantitative restrictions

Trade: liberal regimes & diversified structure


Opportunity - Market Size


Population - Georgia 4,5 millionExisting FTA +350 millionDCFTA + 0,5billionTotal ~ 0.9 billion

Georgia: 4,5 million populationAccess to the 0,9 billion market

‘04 ‘05 ‘06 ‘07 ’08 ‘09 ’10 ‘11 ‘12

Number of Taxes 21 7 7 7 6 6 6 6 6

VAT 20% 20% 18% 18% 18% 18% 18% 18% 18%

Income Tax 12-20% 12% flat 12% flat 12% flatSocial Tax + Income Tax

32% 25%

Social Tax + Income Tax

20%20% 20% 20%

Social Tax 33% 20% 20% 20% - - - - -

Corporate Income Tax

20% 20% 20% 20% 15% 15% 15% 15% 15%

Dividend & Interest

Income Tax10% 10% 10% 10% 10% 5% 5% 5% 5%

No payroll tax or social insurance tax

No capital gains tax

No wealth tax, inheritance tax or stamp duty

Foreign-source income of individuals fully exempted

Accelerated depreciation on capital assets

Loss carry forward for income tax purposes

No restrictions on currency convertibility or repatriation of capital & profit

Double taxation avoidance treaties with 40 countries

Taxation is simple, low, efficient and fair


According to 2009 Tax Misery & Reform Index, released by Forbes Business & Financial News, Georgia is thefourth least tax burden country after Qatar, UAE and Hong Kong

Since 1 January 2009, income

tax declined to 20% from 25%

Forbes Tax Misery & Reform Index


Labor Availability

60,0

70,0

80,0

90,0

100,0

110,0

2005 2006 2007 2008 2009 2010 2011 2012

Georgia - one of the most liberal labor environments (3rd best globally), according to the Heritage Foundation, 2012

Frontier Markets avg

Georgia

Greater Labor Freedom

Source: MOF and Heritage Foundation, 2012

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

• 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.

Foreign Direct Investment

• Strong and Rising FDI Stimulates Economic Prosperity

• 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)


Energy; 18%

Other sectors; 17%

Financial sector; 15%

Consultancy; 12%

Manufacturing; 11%

Transport and

Communication; 11%

Real Estate; 8%

Construction; 4%

Mining; 4%

340 499 450

1190

2015

1564

658 8141117

8,5%9,7%

7,0%

15,3%

19,8%

12,2%

6,1%7,0%

7,8%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

0

500

1000

1500

2000

2500

2003 2004 2005 2006 2007 2008 2009 2010 2011

FDI FDI as % of Nominal GDP

FDI/GDP ratio compares favorably with peersFDI Breakdown by sectors 2011

Investment Opportunities in Georgia


Hydro Power Hub

Tourism

Industries

Agriculture and Agribusiness

Regional Logistics Corridor

Regional Services Hub

Hydro Power Hub

Significant Hydro Power Potential

Installed capacity of > 2,500 MW

Additional potential > 4,500 MW

• Generation cost (6 USD Ct) 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 500/400 KV power transmission line from Georgia to Turkey to be completed in 2013

Opportunities

• Several large scale projects (> 100 MW)

• ~ 70 small/medium projects (< 100 MW)

14

Overview of Georgia's (hydro-)power sector


Importance of the sector low in terms of GDP and employment

▪ Power generation1 accounts for 3% of GDP and ~ 1% of employment but is of high strategic importance to Georgia

▪ ~ 10% of power production are exported, but Georgia still needs to import power during winter

Power sector with strong focus on cost competitive HPP

▪ Georgia boosts significant and economically viable HPP potential – already today 78% of power generated via HPP (2,700 MW) – 22% via thermal (mainly gas)

▪ All new HPPs operate in a liberalized market ▪ Cost of hydropower generation is very competitive in the region

Large projects have been placed and pipeline is filled

▪ FDI inflows amounted to USD 200 mn in 2011 and are growing▪ 75% of economically viable potential not yet exploited▪ Projects of up to USD 750 mn have been concessioned to investors from, e.g.

India, Turkey, Czech (some are still open for add. Investment)

▪ Domestic: Demand growth and increasing share of renewables requires an extension of hydropower generation by around 65% until 2020

▪ 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

Strong demand growth prospects

Georgia surrounded by countries with a structural power deficit or expensive power generation


Turkey

South Russia

Georgia

Armenia

Azerbaijan

IranIraq

Greece

Bulgaria

Romania

KazakhstanUkraine

Israel

Lebanon

Uzbekistan

Turkmenistan

Structural deficit by 2020Ad hoc deficits projectedNo deficit, but current tariffs >Georgia's generation costNo deficit, but subsidized tariffs

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

▪ Turkey expected to have deficit of up to 80-120 TWhby 2020, with seasonality of its demand matching Georgia's supply

▪ Russia’s Southern dis-tricts 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

2020

Hydropower pipeline boosts several new megaprojects above 100 MW capacity that are currently open for investment


Ready to invest?Project Forecast Invest. volume

USD millions1

Capacity

• Oni Cascade 664282 MW

• Khaishi HPP 620400 MW

• Tobari HPP 310200 MW

• Fari HPP 297180 MW

• Tekhuri HPP 260132 MW

• Lentekhi HPP 189120 MW

• Hydropower pipeline also boosts ~70 small/medium projects (<100 MW capacity) that are currently open for investment

Tourism


Fast growing sector▪ Number of visitors increased 33% in 2010 and 39% in 2011 reaching 2.8 million▪ Georgia attracts visitors mainly from neighbors: Turkey (26%), Azerbaijan (25%), Armenia (25%), Russia (10%)▪ Average stay ~ 5 nights / Average spend of USD 1,500▪ Overall capacity of < 10,000 rooms▪ Already operating hotels - Sheraton, Radisson, Marriot, Holliday Inn, (under construction - Cempinski, Hillton) etc.

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


Total international tourist arrivals # of arrivals into Georgia

0,61,0 1,1 1,3 1,5

2,02,8

3,7

4,9+38% p.a.

+33% p.a.

+29% p.a.

2013F2012E2011201020092008200720062005

International arrivals have seen ~40% year-on-year growth

International luxury hotel chains doing well; more are coming to the market


Hotel Chain Hotelier’s assessment of performance

“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 from May to September”

– Alexander KvaratskheliaMarketing Manager

“ We are very optimistic as demand has been increasing rapidly. Hotel occupancy hovers around 85%. Our guests come from all around the world representing various sectors including business, sportmen and tourists”

– Oto BerishviliSales & Marketing Manager

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

– Omer SubasiGeneral Manager

Verbatims of international hotel brands in GeorgiaUpcoming international hotel brands before 2015

Location

Batumi

Tbilisi

Batumi

TbilisiBatumi

Tbilisi

Investment opportunities in tourism sector

Expansion of summer ”sun and beach” franchise focusing on high-end segment

All inclusive summer resorts New master resort

development

Description

Potential location

1 2

Batumi Anaklia KobuletiOther Black Sea

locations

Mestia Gudauri Bakuriani Goderdzi

Development of large-scale integrated casino complex to Serve regional markets.

Include hotels, casino entertainment, family Services and shopping Fiscal invesntives

available

Master developmentof winter resorts with unique profile equivalent to the Alps

Government is fully committed to provision of basic infrastructure

Four season resort value preposition

Majestic landscapes allowing for a wide range of summer tourism activities such as trekking, horse riding, bird watching and river racing

• Mestia Gudauri Bakuriani Goderdzi Kazbegi Other locations

Batumi TbilisiOther locations

Development of Spa Resorts

Include hotels, Different types of Clinics, fitness, Outdoor activities

4

Tskhaltubo AkhtalaOther locations

53


“Sun-beach” resorts

Winter ski resorts

Summer mountains resorts Spa Resorts

Regional Casino City

Manufacturing Sector

Manufacturing and industries account for around 13% of GDP and ~ 5% of employment

Largest industries are food and beverages (3% of total GDP) and metal products (2.5%)

Advantage to process goods -competitive cost of power, labor and strategic location

2 Free Industrial Zones - In FIZ, businesses are exempted from all tax charges except Personal Income Tax

Opportunities: Large import overhang in goods that are usually not traded extensively provides regional import

substitution potential in food processing, construction materials, household gods etc Georgia’s current advantages in terms of handling large transshipment flows, business

stability, low cost of power generation and existing raw materials/intermediate products provide opportunities for large industrial bets, like production of iron and steel products, aluminum etc

Poti

Batumi

ArmeniaAzerbaijan

Russia

Turkey

Black Sea Kutaisi

MRNRailway

Kulevi

Tbilisi

FIZFIZ

2 Free Industrial Zones (FIZ)

Mestia


Trade balance in Georgia and in the region

-6

Chemicals

Food

Wood and paper

Transportation costIndustry and product

62

32

111

288-6 26

-105 52 30

106-17 3

Georgia

73

50

42

63

227

122

82

36

285

-275

6

62

75

32

Meat

Dairy

Seeds/oils

Tannings

Soaps

Oils

Plast./rub.

Plastics

Rubber

Construction

Stone/Plaster

Ceramic

Glass

Cement

Paper

Furniture

Basic material

Iron/steel articles

Aluminium

Iron/steelSele

cted

sec

tors

(pro

mis

ing

lead

s on

ly)

513 46394677 50

1,27320

20

769 66 46

7,997

168

118

-722 140 63

1,682 84 72

972 45 10

-3,240 646 71

9,790 322-78

-907 94

-273 87 24

-431 36 34-579 88 11

Turkey Azerbaijan Armenia

Import overhang, USD mn


Several highly attractive import substitution opportunities

Food processing

Product group Products

▪ Glass & glassware▪ Windows▪ Glassware

▪ Ceramic products▪ Tiles ▪ Sanitary ware

▪ Furniture ▪ Doors ▪ Living furniture

▪ Dairy and eggs▪ Milk ▪ Cheese ▪ Butter ▪ Yogurt

▪ Fruit juices ▪ Jams▪ Vegetable oils

▪ Beverages and spirits ▪ Bottling

▪ Poultry/Beef/Pork/Lamb ▪ Meat

Sector

Construction -Building materials

▪ Articles of wood ▪ Plywood and laminated wood

▪ Prefabs ▪ Articles of cement and steel▪ Ready-mix concrete

▪ Finished articles of steel

▪ Bricks

▪ Preparations of fruits and vegetables

Packaging

Construction -Finishing elements

▪ Plastic packaging

▪ Paper packaging


Several opportunities arising from Georgia’s trans-shipment flows and resources

Opportunity Current advantages to be leveraged Potential for Georgia

▪ Large transshipment flows of raw materials/input (Bauxite) and aluminium cross Georgia to/from Tajikistan (largest aluminium plant in Central Asia)

▪ A lot of water recourses and large hydropower plants in the pipeline

Aluminium industry

▪ Georgia mines Manganese ore▪ Georgia produces ferro alloys, largely for export

(USD ~250 mn)▪ Large imports of iron and steel products to

Georgia (USD ~300 mn) and neighboring countries

▪ Vertical integration of value chain by adding production of iron and steel and related end products

▪ Regional import substitution

Ferro alloys

▪ Georgia and Armenia export copper ores, copper waste and scrap

▪ Import overhang of copper products (alloys and final products e.g. wire, tubes, pipes) amounts to USD ~200 mn in the region

▪ Production of copper alloys and end products (regional import substitution)

Copper

▪ Plastics and petrochemicals production (regional import substitution for plastics/rubber)

▪ Import overhang of plastic products amounts to 230 mn in Georgia and 8 bln in the region

▪ Georgia transships large flows of petroleum products

– Production of aluminium

▪ Value chain integration

– Production of aluminium products (fabricated or end products)

Polymers & other plastics


Agriculture and Agribusiness

• 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 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

Georgia’s competitiveness High potential projects

Expo

rt-le

dD

omes

tic

Productivity gain potentials

Nuts (cultivationand processing)

▪ Top 5 global exporters of nuts, ideal growing conditions, commitment from Ferrero

Grapes (cultivation and winemaking)

▪ Distinctive varieties and growing conditions, traditional strong industry, access to CIS market, large base of experienced and low-cost labor in the sector

Lamb (husbandry and meat production)

▪ Well-reputed for lamb quality, significant export potentials to Middle Eastern markets

Citrus (cultivationand juices)

▪ Ideal growing conditions, multiple investors already establishing fruit, processing operation, large base of experienced and low-cost labor

Beef/dairy (milk and cattle meat production)

▪ Big import overhang, sizeable and fast growing domestic demand, good natural conditions for rearing

Pork (meat production) ▪ Import overhang, sizeable and fast growing domestic demand, good natural conditions for rearing

Poultry (chicken meat and egg production)

▪ Big import overhang, sizeable and fast growing domestic demand, commercial farms with intensive operations already in place

Olive oil (cultivationand processing)

▪ Large demand for oil-related products, good growing condition, access to CIS markets

Stone fruits (cultivationand juices)


Tomato (cultivationand canned)

▪ Import overhang, low investment needed in greenhouse and irrigation, quicker to realize quality and yield improvements

Tobacco (plantationand processing)

▪ Sizable demand for tobacco and tobacco-related products, well-reputed for tobacco quality

Cucumber (cultivationand canned)

▪ Low investment needed in greenhouse and irrigation, quicker to realize quality and yield improvements

Apple (cultivationand canned)


Onion (cultivation) ▪ Low investment needed, quicker to realize quality and yield improvements


http://images.google.fr/imgres?imgurl=http://blog.masdelarbre.com/public/Produits Frais/magnifique_abricot.jpg&imgrefurl=http://blog.masdelarbre.com/post/2007/06/01/Les-Fetes-et-l-Abricot&h=209&w=200&sz=9&hl=en&start=11&tbnid=Np3q8nfMatDAcM:&tbnh=106&tbnw=101&prev=/images?q=abricot&gbv=2&hl=en

http://images.google.co.uk/imgres?imgurl=http://www.verger-de-cire.com/upload/articles/poire.jpg&imgrefurl=http://www.verger-de-cire.com/catalogue.php?cat=21&rub=0&lang=nom&start=3&h=290&w=290&sz=50&tbnid=EyAegn6K-vmI0M:&tbnh=115&tbnw=115&hl=en&prev=/images?q=poire&gbv=1&svnum=10&hl=en

http://findicons.com/icon/126317/onion?id=320391

Regional competitiveness and potentials map

Based on regional specialization (natural endowments, cultivation history), productivity and seasonality

Crop potentials by region




http://www.desktop-icon.com/cart.php?add=desktop-buffet--cabbage


http://www.desktop-icon.com/cart.php?add=desktop-buffet--cabbage

Regional Logistics Corridor


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

• 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

• Baku-Tbilisi-Kars railway – direct connection between EU and Central Asia

• Logistical centers

Georgia is in a highly strategic location for transshipment


• 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 from large addressable transit flows, growing economies and landlocked resources

• Georgia is already largely transshipment oriented, with transshipment values amounting to ~3x its GDP

• Logistics accounts for around 7% of GDP and ~ 3% of employment, contributing to 19% of all exports and 9% of all imports

1 Including Eastern Europe, Balkans and Turkey 2 Excluding Central Asia, Asia and Middle East 3 Estimated using total export volume by province4 Covering trade flows stated or convertible into tons only (excludes, e.g. electricity), equal to >80% of all flows in value

Georgia can utilize its location to address several flows on the major European-Central Asian trading routes

▪ Total trade value (bn USD)

1

Caucasus – Europe1/RoW2

~44 mn tons p.a.Central Asia – Europe1/RoW2

~79 mn tons p.a.

Western China3 – Europe~3 mn tons p.a.

3

Total trade on all 3 routes▪ Total trade volume (mn tons)4

~126~100

2010North-South corridor

Russia-Turkey~35 mn tons p.a.

2


Georgia serves as the entry gate to a landlocked region boosting significant resource reserves


Iron ore2%USD 4 bn

Other (bauxite, gold, nickel, PGMs)

Zinc5%USD 1 bn

Copper3%USD 3 bn

Oil3%USD 100 bn

Coal5%USD 28 bn

Gas14%USD 9 bn

For comparison:region represents

only ~1.6% of global population

Georgia’s transport infrastructure

Rail▪ 1,500 km (90% electrified)▪ ~7,000 rolling stock, 180 locos

Road▪ 1,500 km international highway + 20,000 km internal and

local roads

Rail▪ BTK connection to Turkey▪ Modernization▪ Tbilisi bypass▪ ~2500 new rolling stock

Road▪ East-West highway upgrade

Poti seaport▪ 13 berths, 8-10m draft▪ Container and bulk (210k TEU)▪ Owned/operated by Maersk/RAKIA

Batumi seaport▪ 5 berths, 1 offshore mooring, 11m draft▪ 90% petroleum/oil, 10% containers (44k TEU) ▪ Operated by JSC KazTransOil

Kuhlevi seaport▪ Crude oil, petroleum, and lubricants▪ Owned/operated by State Oil Company Azerbaijan

Poti seaport▪ New container berth (2014)

Deep-sea port▪ Min. 2 berth of 20m draft

(PanaMax)▪ First phase: Dry bulk (10m tons) and

containers (200k TEU)▪ USD 200 mn investment volume

Tbilisi international airport▪ ~1 mn passengers (capacity: 3 mn)▪ Serving 28 destinations

Batumi international airport▪ 100,000 passengers

Kutaisi international airport▪ Passenger, incl. low-cost airlines▪ Currently under construction

Poti international airport▪ Cargo airport, not yet commissioned

Mode of transport

Existing infrastructure and flows Upgrades

Road

/Rai

lM

ariti

me

Air


Regional Services Hub


• Georgia’s service sector achieves leading ranks among regional economies in terms of value added and trade

• 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

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

Opportunity to position Tbilisi as a financial center for Caucasus, West Asia and Eastern Europe around 4 service pillars

Multiservice hub

Wholesale Banking

3 4Tbilisi Financial City

Capital markets

2

Hubbing around Key Financial and Professional ServicesGeographic depth: Caucasus, Eastern Europe and West Asia

Regional HQ’s (MNC’s, Banks)

1

West Asia

Eastern Europe+

Caucasus


Batumi Tbilisi

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 visit (1/2 to 1 day), higher share of wallet, and repeated visits

▪ Presence of flagship brands will drive retail brand cluster growth

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▪ Solid retail, hospitality and other supporting services

infrastructure▪ Integration with other tourism offerings e.g. sun &

beach, casino▪ Easier to drive investments

Opportunity to position Georgia as a regional retail destination

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


Key success factors for a “destination mall”


10-15 key success factors for a “destination mall”

Leisure

▪ Complete range for all customers, to draw regular traffic on weekdays as well as weekends▪ Frequent renewal of the leisure offering with new attractions every year, and regular events (exhibitions, stands,

seasonal themes) ▪ Guaranteed safety for all leisure activities (partnerships with leisure specialists preferred)▪ Modular pricing with variable formulas (e.g., “pay-per-ride”, “one-day pass”, etc.)▪ Scheduling of shows outside peak hours in order to increase stay times

3

Food and beverages

▪ Diversity of offering for different needs and budgets, with categories of option: “fast food”, “fast casual”, and “seated/fine dining” (theme and/or gourmet restaurants )

▪ Large choice of cafés/snack bars on every floor▪ Selection of most appropriate partners to ensure frequent renewal of the offering

4

Services and transport

▪ Easy access, with sufficient parking space, a good transport mix (possibly partnerships with local public transport companies), and fluid traffic in front of the mall even at peak hours (e.g., wide car park entrance)

▪ Numerous and optimally located services for customers to make their visit comfortable▪ Diversity of distribution channels (travel agencies, tour operators, businesses) to draw in maximum traffic

5

▪ Overall mix balanced in terms of activities (retail, leisure, restaurants) and in line with visitor demand for each activity (interms of age bracket, price, and needs)

▪ Need to choose a consistent general theme that runs through all activities and is attractive for the core customer target▪ Clear zoning for each activity, making it easy to find one’s way around the mall▪ Fluid circulation for the different categories of visitor▪ Frequent renewal of the offering, to ensure repeat visits

Retail

▪ Uniqueness of offering with the presence of flagship brands found nowhere else in the region▪ Diversity of offering with different types of store: “driver” banners, food retail banners, department stores, and

stands/souvenir stores▪ Size of stores adapted to tenants’ needs▪ Client charter to ensure the overall consistency and frequent renewal of the offering (e.g. seasonal sales)

2

1 Concept

Real Political Will of the Government of Georgia

• Real political will to support and facilitate of Foreign Direct Investment

(FDI)

• Very strong political commitment to low and simple taxation and

improvement of services in aim to keep attracting investment climate and

business environment

• Democratic Elections

• No policy drift or policy reversal


Georgian National Investment Agency

• State agency

– Promoting Georgia internationally

– Supporting foreign investments and investors

before, during & after investment process

• “One-stop-shop” for investors

• Moderator between

Investors, Government and Local

Companies


LocalCompanies

Investors

Government

GNIA

Mission - Attracting Greenfield and M&A Investments

What you can get from GNIA


Information

• General data

• Statistics

• Sector Researches

Communication

• Access to Government of Georgia at all levels

• Local partners (Business Associations, private companies)

After care

• Legal advising

• Supporting services

41

GEORGIAN NATIONAL INVESTMENT AGENCY

8, Rustaveli avenue, 0118 Tbilisi, Georgia

Tel: (+995 32) 2 281 196

E-mail: [email protected]

www.investingeorgia.org

mailto:[email protected]?subject=Invest in Georgia Enquiry

http://www.investingeorgia.org/

Investment Climate & Opportunities in Georgia• Strong and Rising FDI Stimulates Economic...

Documents

Transcript of Investment Climate & Opportunities in Georgia• Strong and Rising FDI Stimulates Economic...