Successfully investing in Georgia

published on May 16, 2018

 

How do you assess the current economic situation in Georgia?

Georgia's economy is continuously growing. In 2017, the country reported real GDP growth of 4.3 per cent.

 

Compared to previous years, the inflows of foreign direct investments (FDIs) have increased so far in 2018. The country has also advanced in international rankings. Georgia's foreign trade turnover significantly rose in 2017 and the upcoming signing of the free trade agreement with the EU and China will even more positively affect this trend.

 
In 2017, the European Union resolved to abolish the visa regime for short-term stays of Georgian citizens.  From the political perspective, this is tremendous success for Georgia on its way to the accession to the Euro-Atlantic structures and also a sign of recognition for Georgia for introducing necessary reforms in recent years and for adjusting its legislation to the EU standards. The abolition of the visa regime will stimulate strong economic growth, and also growth in tourism, exports, imports and FDIs.

 

How would you describe the investment climate in Georgia? Which sectors offer the largest potential?

Georgia has one of the simplest tax regimes in the world, which means that doing business in Georgia is relatively cost-effective and simple. The next step in this process was the introduction of several key tax reforms aimed at encouraging corporate investment. In January 2017, the Estonian tax model was introduced. It exempts companies from the corporation tax if they reinvest their profits, and has a positive impact on the expansion of the existing production capacities. Companies are thus enabled better access to financial resources and increase their productivity.

 
Due to its special geographical location, Georgia has many advantages in terms of imports and exports, international trade and foreign business investment. The main impetus comes from construction activities and investments in the hospitality industry. Also the banking sector and the mechanical engineering industry have great potential.

    

What challenges do German companies face during their business ventures into Georgia?

The Georgian government actively supports foreign investments by creating good investment framework conditions. The numerous legislative reforms introduced in recent years offer investors a very good investment climate. Amendments to insolvency law – i.e. the simplified procedure for closing companies– have considerably improved the business environment and this factor is reflected also in international ratings.

    

How will Georgia benefit from the New Silk Road?

The New Silk Road, a project in which 60 countries participate, may make Georgia a logistics, trade and transit hub for the region.

 
A new 185km long East-West Highway is due to be completed by 2020. The Black Sea seaside resort of Anaklia is being turned into Georgia’s first Deep Sea port. The port will be also able to accommodate modern container ships.

 
Georgia is the only country in the region to sign the free trade agreement with the EU and China.
Thus, there will be no trade barriers to foreign investors.

   

In your opinion, how will Georgia develop?

Georgia's political situation is currently stable, whereas the Georgian Dream Coalition was re-elected during the 2016 parliamentary elections, winning a constitutional majority vote. The country continues to be exposed to geopolitical risks from the breakaway territories (South Ossetia and Abkhazia) and the strategic alliance agreement with Russia.

 
In October 2018, Georgia will be the guest of honour during the Frankfurt Book Fair. The event will offer the Georgian literature and the representatives of the book industry a unique opportunity to present themselves to book fans from all over the world. The invitation to an international event of such significance will bring about new developments in the German-Georgian cultural and business relations.

    

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Klaus Kessler

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+380 44 5862 303
+49 911 9193 9058

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