Regional Integration: Positioning Botswana as a regional economic hub Experiences from Kenya
Regional Service Hub
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REGIONAL SERVICE HUBREGIONAL SERVICE HUB(Retail/Healthcare/BPO/Financial Services/Educati on)(Retail/Healthcare/BPO/Financial Services/Educati on)
Georgian National Investment Agency 2013
www.investi ngeorgia.org 2
IN IN GEO
REGIONAL SERVICES HUB
• Georgia’s service sector achieves leading ranks among regional economies in terms of value added and trade
• Services have major share of FDI infl ow of 45% in 2011 with USD 500 million:
• OPPORTUNITY TO CAPITALIZE:OPPORTUNITY TO CAPITALIZE:
» Financial services/headquarters » Retail hub as the desti nati on-of-choice for shopping
» Financial services have grown at 19% p.a. since 2009 and is the leading service sub-sector for FDI att racti on with 15% of total infl ows in 2011
» Consultancy services att racted 12% of total FDI infl ows in 2011
» Wholesale/retail trade accounts for 40% of service GDP, and strong FDI infl ows rebound at 48% p.a. since 2009
» FDI infl ows in healthcare/social work have grown at 146% p.a. since 2007
VESTORGIA
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VR
OVERVIEW OF GEORGIA’S SERVICE SECTOR
• Service accounts for 43% of GDP, 14% of exports, 7% of imports and ~ 10 % of employment (plus another ~ 20% in the form of informal employment)
• Georgia’s service sector achieves leading ranks among regional economies in terms of value added and trade
Large share of GDP and employment
• High fi xed asset investment share (26% - USD 466 million in 2010)• Major share of FDI infl ow of 45% in 2011 with USD 500 million
Leading investment engine
• Financial services have grown at 19% p.a. since 2009 and is the leading service sub-sector for FDI att racti on with 15% of total infl ows in 2011
• Consultancy services only started to receive FDI in 2010 but att racted 12% of total FDI infl ows in 2011
• Wholesale/retail trade accounts for 40% of service GDP, and strong FDI infl ows rebound at 48% p.a. since 2009
• FDI infl ows in healthcare/social work have grown at 146% p.a. since 2007
Several sub-sectors with high growth investment potenti als
• Several medium size projects placed by Middle East investors (Abu Dhabi Group USD 42 million, Grand Cinema USD 30 million)
Few projects placed except for real estate
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IN IN GEO IN
INOVERALL SECTOR TRANSPARENCY
CONTRIBUTION TO THE ECONOMYCONTRIBUTION TO THE ECONOMY
INVESTMENTINVESTMENT
Investment in fi xed assets, USD mn
FDI infl ow2
USD mn Top projects
Investor
RAKIA (UAE)
Abu Dhabi Group (UAE)
Grand Cinema (UAE)
1 2011 data; additi onal 20% of employment in the form of informal employment2 2010 data
Dentsu Inc (Japan)
Project
Imedi TV (90% stake)
Standard Bank JSC
Entertainment
Social Thinker GmbH
VolumeUSD mn
42
Not disclosed
30.2
Not disclosed
USD mn or ‘000 FTE
% of total
In percent
100%
43
GDP1 Employment1 Exports2 Imports2
10 14 7
43844316640
23% 60%26% 62%
299
2009 20092010 2010
466 690
393
VESTORGIA
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SUB-SECTOR TRANSPARENCY
SECTOR DETAILSSECTOR DETAILS
GDP contributi on of service sub-sectors2011, percent, USD mn
Retail trade of motor fuel
Repair of motor vehicles,personal and household goods
Other constructi on work
Financial intermediati on
Post and telecommunicati ons
General constructi on
Educati on
Other service acti viti es
Health and social work
Wholesale, except motor vehicles
Retail trade, including motor vehicles
2009-2011 CAGRPercent
14
76
3
100% 6,34022
-3
8
10
11
17
19
2011
11119
19
9
11
3
9
11
2
11
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IN IN GEO
REGIONAL BENCHMARK OF SERVICE SECTOR CONTRIBUTIONREGIONAL BENCHMARK OF SERVICE SECTOR CONTRIBUTION
GEORGIA HAS A VIBRANT SERVICE SECTOR WHICH CONTRIBUTES SIGNIFICANTLY TO THE ECONOMY
Service value added/GDP2
2011, percent
Georgia Kyrgyz Republic1
TurkeyBahrain
UkraineGeorgia
TajikistanUkraineKyrgyz Republic
Kazakhstan Armenia
UzbekistanAzerbaijan
Armenia
Tajikistan1Saudi Arabia
KazakhstanTurkmenistan
TurkeyAzerbaijan
UAE1
Oman
Syria1 Syria1
Iran1
Saudi Arabia
Trade in services/GDP3
2011, percent
IN27
3438
4244454546
5051
606064
75 INGEO
c1
8
811
13
1316
18
19
2123
26
38
1 Esti mate based on 2010 data2 Include ISIC item 50-99. Value added is the net output of a sector aft er adding up all outputs and subtracti ng
intermediate inputs. It is calculated without making deducti ons for depreciati on of fabricated assets or depleti on and degradati on of natural resources.
3 Include ISIC item 50-99. Trade in services is the sum of service exports and imports divided by the value of GDP, all in current U.S. dollars.
VESTORGIA
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GEORGIA HAS HIGH AVAILABILITY OF PHYSICIANS YET NEEDS IMPROVEMENTS IN HEALTHCARE INFRASTRUCTURE
REGIONAL BENCHMARK OF HEALTHCARE ECOSYSTEMREGIONAL BENCHMARK OF HEALTHCARE ECOSYSTEM
Number of physicians per 1000 populati on, 2011
Number of hospital bedsper 1000 populati on, 2011
STGIA
0,70,8
1,11,1
1,51,51,71,91,9
2,42,32,6
2,83,43,53,73,83,8
4,2Georgia
1 Despite number of hospital increased from 229 to 241 from 2000-2009, number of beds declined sharply from 21,200 to 13,600; Bed uti lizati on rate was low at 30% due to outdated faciliti es; By 2013-end, 8,000 beds will be privati zed to improve faciliti es and use effi ciency
Ukraine
Belarus Kazakhstan
KazakhstanBulgaria
BulgariaTajikistan
UkraineAzerbaijan
AzerbaijanUzbekistan
TurkmenistanGeorgia
Tajikistan
Turkey
United Arab Emirates
Saudi Arabia
Turkey
Kuwait
Syria
United Arab Emirates
Saudi Arabia
Bahrain
Albania
Oman
Iran
Iran
Pakistan
Syrian Arab Republic
QatarIraq
Iraq
Pakistan
RomaniaAlbania
ArmeniaTurkmenistan
2,91UzbekistanArmenia
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IN IN GEO
GEORGIA HAS STRONG FOUNDATION TO DEVELOP A REGIONAL FINANCIAL CENTER
REGIONAL BENCHMARK OF HEALTHCARE ECOSYSTEMREGIONAL BENCHMARK OF HEALTHCARE ECOSYSTEM
Strength of legal rights in fi nancial sector1, 2011, 0= lowest; 10=highest
Credit depth of informati on2
2011, 0= lowest; 6=highest
Ukraine Georgia
1 Strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending; 2 Credit depth of informati on index measures rules aff ecti ng the scope, accessibility, and quality of credit informati on available through public or private credit registries
Georgia Armenia
Armenia Saudi Arabia
Azerbaijan Azerbaijan
Saudi Arabia Kazakhstan
Bahrain Turkey
OmanKyrgyz Republic
TurkeyQatar
United Arab EmiratesUkraine
TajikistanBahrain
UzbekistanUzbekistan
SyriaSyria
Tajikistan
QatarOman
Iran United Arab Emirates
KazakhstanIran
IN1
22
4444444
566
89 IN
EO0
233
44444
5555
666
VESTORGIA
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GEORGIA’S POTENTIAL REGIONAL SERVICE HUB CAN BE BASED ON THREE COMPLEMENTARY COMPONENTS
A regional lifestyleA regional lifestyleand service huband service hub
Connectivity andConnectivity andtraffic hubtraffic hub
Airline + Airport
Tourism
Hospitality
Entertainment
Att racti veness Connecti vity Fiscal policies
Regional head-Regional head-quarters and quarters and
expatriate hubexpatriate hub
RegionalRegionalservice platformservice platform
Regional Headquarters• Financial• Non fi nancial
Expatriates hub
Retail
Health-care
Financial services
Educati on
BPO
Key assetsKey assets
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IN IN GEO
OPPORTUNITY TO POSITION TBILISI AS A FINANCIAL CENTER FOR CAUCASUS, WEST ASIA AND EASTERN EUROPE AROUND 4 SERVICE PILLARS
Regional HQ’s (MNC’s, Banks)
Capital markets
Multi service hubWholesale
Banking
Caucasus
West Asia
Eastern Europe+
Tbilisi Financial City
GEOGRAPHIC DEPTH: CAUCASUS, GEOGRAPHIC DEPTH: CAUCASUS, EASTERN EUROPE AND WEST ASIAEASTERN EUROPE AND WEST ASIA
HUBBING AROUND KEY FINANCIAL HUBBING AROUND KEY FINANCIAL AND PROFESSIONAL SERVICESAND PROFESSIONAL SERVICES
IN
VESTORGIA
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OPPORTUNITY TO POSITION GEORGIA AS A REGIONAL RETAIL DESTINATION
VISION IS TO DEVELOP MEGA MALLS IN KEY LOCATIONS TO TRANSFORM GEORGIA INTO THE REGIONAL 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 GEOGRAPHYRETAIL HUB LEVERAGING HIGH TRAFFIC OF FOREIGN TOURISTS AND STRATEGIC GEOGRAPHY
VESTRGIA
Benefi ts of desti nati on mega mall developmentBenefi ts of desti nati on mega mall development
• • Complement overall tourism strategy with solid retail Complement overall tourism strategy with solid retail value propositi onvalue propositi on
• • Retail magnet for foreign tourists and affl uent local with Retail magnet for foreign tourists and affl uent local with longer durati on of visit (1/2 to 1 day), higher share of longer durati on of visit (1/2 to 1 day), higher share of wallet, and repeated visitswallet, and repeated visits
• • Presence of fl agship brands will drive retail brand Presence of fl agship brands will drive retail brand cluster growthcluster growth
Tbilisi and Batumi as most potenti al locati onsTbilisi and Batumi as most potenti al locati ons
• • Established tourist desti nati ons with 80% of foreign Established tourist desti nati ons with 80% of foreign tourist traffi c in Georgiatourist traffi c in Georgia
• • Accessible with existi ng internati onal airports and Accessible with existi ng internati onal airports and major transnati onal highway/ railwaymajor transnati onal highway/ railway
• • Solid retail, hospitality and other supporti ng services Solid retail, hospitality and other supporti ng services infrastructureinfrastructure
• • Integrati on with other tourism off erings e.g. sun & Integrati on with other tourism off erings e.g. sun & beach, casinobeach, casino
• • Easier to drive investmentsEasier to drive investments
BATUMIBATUMI TBILISITBILISI
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IN IN GEO
LeisureLeisure
Food and BeveragesFood and Beverages
RetailRetail
Services and transportServices and transport
• Att racti ons and acti viti es
• Shows and entertainment
• Themed setti ng and atmosphere
• Culture
• Themed restaurants, bars, clubs
• Dinner shows
• Souvenir stores• Concept stores• Everyday stores• Services
• Transport systems• Roads• Connecti vity
GEORGIA NEEDS TO DEVELOP DESTINATION MALLS WITH CLEAR OVERARCHING CONCEPTS AROUND 4 PILLARS
Clear positioning (target segment, value proposition) reflected in all activities through the overall Clear positioning (target segment, value proposition) reflected in all activities through the overall atmosphere, architecture, music, décor, and materials, and offering a unique experienceatmosphere, architecture, music, décor, and materials, and offering a unique experience
OVERARCHING CONCEPTOVERARCHING CONCEPT
VESTORGIA
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Retail
OPPORTUNITIES TO TRANSFORM GEORGIA INTO A REGIONAL HEALTHCARE HUB
KEY PILLARS OF HEALTHCARE STRATEGY DEVELOPMENTKEY PILLARS OF HEALTHCARE STRATEGY DEVELOPMENT
Urban planUrban planHow to integrate healthcare city into the city?How to integrate healthcare city into the city?
Operating modelOperating modelHow does Developer position itself to maximize value from How does Developer position itself to maximize value from
Sector (e.g., engaging 3rd party operator?)Sector (e.g., engaging 3rd party operator?)
Healthcare sector strategy and industry value proposition definitionHealthcare sector strategy and industry value proposition definition• • What is the aspiration and optimisation function for the developer/creator of City?What is the aspiration and optimisation function for the developer/creator of City?• • What are key supply/demand gaps within healthcare sector that City should target?What are key supply/demand gaps within healthcare sector that City should target?• • What are the key elements of a value proposition for each targeted industry?What are the key elements of a value proposition for each targeted industry?
Tenant strategyTenant strategyWhich anchor Which anchor tenants to attract tenants to attract and how?and how?
Vision is to develop Vision is to develop Healthcare city to Healthcare city to transform Georgia transform Georgia into the regional into the regional healthcare hub healthcare hub leveraging high leveraging high traffi c of foreign traffi c of foreign tourists, existi ng tourists, existi ng qualifi ed low-cost qualifi ed low-cost physiciansphysicians
Real estate strategyReal estate strategyHow to create How to create maximum value from maximum value from the land?the land?
Financial and Financial and investment strategyinvestment strategyHow to invest to How to invest to maximize returns?maximize returns?
1
2A2A 2B2B 2C2C
2
3
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IN IN GEO
ININ GEO
130
TOTAL ADDRESSABLE MARKET FOR GLOBAL SOURCING TOTAL ADDRESSABLE MARKET FOR GLOBAL SOURCING AND DOMESTIC OUTSOURCING, 2020, USD BILLIONSAND DOMESTIC OUTSOURCING, 2020, USD BILLIONS
Core markets 2008
500
200-250190-220
230-250
380-420 1,500-1,640ESO/R&DO
ITO
BPO
405-440
200-220
895150
220
• • BFSI, telecom, BFSI, telecom, retail, pharma, retail, pharma, manufacturing, manufacturing, traveltravel
• • NA, WE, JapanNA, WE, Japan• • Large enterprisesLarge enterprises
• • Public Public sectorsector
• • HealthHealth• • MediaMedia• • Uti liti esUti liti es
• • BrazilBrazil• • EEEE• • IndiaIndia• • ChinaChina
SMBsSMBs
Growth in core markets
New verti -cals in developed countries
New customer segments
Domesti c outsourcing mkt. in new geographies
Total ad-dressable market in 2020
O&O ENCOMPASSES USD 1.6 TRILLION ADDRESSABLE MARKET BY 2020; NEW UNTAPPED SEGMENTS WILL DRIVE 75% OF FUTURE INCREMENTAL GROWTH
VESTORGIA
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“Dedicated BPO center”
Positi o
ning
Basic transacti onal services
0-5 years
+5 years
Advanced transacti onal services/basic knowledge services
Dri
vers
Pote
nti a
l pla
ys
for
Geo
rgia
BPO
ITO
/ESO
OPPORTUNITIES TO TRANSFORM GEORGIA INTO A REGIONAL BPO HUB SERVING EU MARKETS
VERGDesti nati on of choice for
companies operati ng in the fi eld of BPO/ITO for
EU markets
Transacti on center primarily for Transacti on center primarily for Western European marketsWestern European markets
Non-voice back-offi ce services modelNon-voice back-offi ce services model
• • Low-cost laborLow-cost labor
• • Basic CAD/CAM services Basic CAD/CAM services (e.g., reformatti ng)(e.g., reformatti ng)
• • Finance & accounti ngFinance & accounti ng• • Employee services & payrollEmployee services & payroll• • Selected verti cal processes in Selected verti cal processes in
banking, fi nancial services and banking, fi nancial services and insurance (e.g. CRM, mortgage, insurance (e.g. CRM, mortgage, investment) and logisti cs investment) and logisti cs managementmanagement
• • Deep talent poolDeep talent pool• • Engaged workforceEngaged workforce• • Building career modelsBuilding career models
• • Advanced CAD/CAM Advanced CAD/CAM programmingprogramming
• • IT infrastructure servicesIT infrastructure services
• • Business analyti csBusiness analyti cs• • Mathemati cal modelingMathemati cal modeling• • Business researchBusiness research• • Market researchMarket research• • Data management servicesData management services
EU/global center for core EU/global center for core competenciescompetencies
INVESTAIN GEORGIA
GEORGIAN NATIONALGEORGIAN NATIONALINVESTMENT AGENCYINVESTMENT AGENCY
www.investingeorgia.orgwww.investingeorgia.org
E-mail: enquiry@investi ngeorgia.orgPortf olio Manager: Mamuka Chikhladze
E-mail: mchikhladze@investi ngeorgia.org