Planning to invest in Georgia? You should first know that there is an investment war in Georgia. The opportunities are as many as a huge number of foreigners are like in a traffic jam rushing toward Georgia. They are from all over the world. There are several reasons for investment in Georgia. Investors have been convinced to spend their wealth on thriving sectors of Georgia’s economy.
What you will read here:
- What are the major reasons to invest in Georgia?
- 1. The geographic location of Georgia
- 2. Ease of doing business in Georgia is incredible now.
- 3. Georgia’s economy is almost free of corruption.
- 4. Taxes are low in Georgia.
- 5. There are four “Free industrial Zones” in Georgia, exempt from taxes.
- 6. Georgia owns a skilled and competitively priced labor force.
- 7. Georgia grants you numerous tourism attractions.
- 8. Georgia’s economy is growing so fast.
- What are the opportunities to invest in Georgia today?
- Where are the investors in Georgia from?
Georgia has been more than charming in the eyes of foreign investors. The economy is growing super fast. Thus, if you are thinking about embarking upon a new flourishing project in Georgia’s economy, you should not waste time. Georgia has faced with remarkable progress during especially the last decade and seeks further growth and prosperity.
So, wait if you disagree with this? In this article, we are going to discuss the main reasons why investing in Georgia is highly recommended, where you should invest, who invests in Georgia now, and why you are missing the bright future awaiting you.
What are the major reasons to invest in Georgia?
First, we are going to list for you the main advantages of investing in Georgia, talking specifically about each in brief.
1. The geographic location of Georgia
The country is located on the famous historical Silk Road. As a matter of fact, the road acts like a bridge connecting Western Asia and Eastern Europe. The strategic location of Georgia is what makes the country a crossroad between the two continents, generating priceless opportunities for import and export activities, international business, foreign business investments, etc.
The country is bordered by the Black Sea, Russia, Turkey, Armenia, and Azerbaijan from four sides. Also, Georgia has access to many thriving economies around. Georgia is more of a transit corridor with diverse access to the sea and land. It opens the doors to Europe for Asian businesses working especially between China and Europe.
2. Ease of doing business in Georgia is incredible now.
The World Bank Group annually publishes a report announcing the ease of doing business in many countries of the world. Georgia’s position is eye-popping; the country is sticking to the 6th place in the global ranking by May 2018. This is the highest position among Europe and Central Asia regions.
So, what does high ease of doing business mean at all? In simple terms, it means the regulatory environment is highly supportive to start and operate a local firm. The ranking has been yielded by taking 10 topics into account, each including several indicators.
3. Georgia’s economy is almost free of corruption.
As you know, corruption can easily cripple any kind of prosperous career. You should make sure about a country’s corruption status before starting your business there. Speaking of Georgia, you should know that the corruption in the economy has been continuously diminishing.
Transparency International has been annually publishing an index called the Corruption Perceptions Index (CPI) since 1995. The index ranks the countries all over the world by the perceived level of corruption in their various sectors, with the help of expert assessments and opinion surveys. With this in mind, what is the rank of Georgia, you may ask?
Georgia is already holding the 41st position among 180 countries. Besides, the record has been improving in recent years. The current rank and the growing trend can ensure you of the low risk existing in business environment ruling on Georgia’s economy.
4. Taxes are low in Georgia.
The number of taxes in recent years has been declining in Georgia. To clarify the reason, you should know that the government is scheduling to use this approach as a viable method to absorb foreign trade and pave the way for them toward establishing companies in the soil of Georgia. That is why the taxes already account for only basic business taxes.
According to the 2016-2017 World Economic Forum report, Georgia has one of the lowest taxes worldwide standing on the 9th position with a 16.4% total tax rate.
There are low tax rates and a transparent tax system in Georgia. At the moment, the government has formulated six flat taxes in Georgia:
- Income tax – 20% (flat-rate)
- Corporate tax – 15%
- VAT – 18%
- Excise tax – on few selected goods
- Import tax – 0%, 5% or 12%
- Property tax – up to 1%
These simply guarantee the simplicity and reliability of the tax system in Georgia.
5. There are four “Free industrial Zones” in Georgia, exempt from taxes.
In addition to all low taxes, you might be surprised to hear that there are four Free Industrial Zones (FIZs) in Georgia where businesses are exempt from all taxes but Personal Income Tax (20%). These four zones are located in these cities:
- Poti (seaport)
- Kutaisi (3rd largest city)
- Tbilisi (the capital city)
All of these Free Industrial Zones (FIZs) are run by private companies. As an investor, you need to rent a space from the FIZ’s operator. The operators for each FIZ are as follows:
- Poti FIZ: Operated by Rakia Georgia FIZ LLC
- Kutaisi FIZ #1: Operated by Georgia International Holding
- Kutaisi FIZ #2: Operated by Hualing Group
- Tbilisi FIZ: Operated by Tbilisi Free Zone JSC
6. Georgia owns a skilled and competitively priced labor force.
Georgia’s economy is free. It holds a high score in The Heritage Foundation ranking. The Heritage Foundation in cooperation with The Wall Street Journal annually creates an index since 1995. The index measures the degree of economic freedom among the world’s nations.
Georgia’s economic freedom score in the index is currently 75.9 (out of 100). It is the 16th freest economy in 2019. This proves Georgia’s labor environment to be one of the most liberal ones in the world.
Georgia’s population is overflowing with qualified and talented workforces. Many of them are multilingual and have received a higher education degree in the West. Russian and English are widely spoken by the new generation. They are mostly able to speak German.
The average monthly salary is roughly 420 dollars in Georgia. This is a relatively low salary in comparison with the average in many Europian countries. Therefore, the expenditures of hiring skilled and talented staff are not high.
7. Georgia grants you numerous tourism attractions.
You are not mad if you compare some parts of Georgia with heaven. The country offers a huge number of absolutely stunning tourism attractions you cannot close your eyes on.
Georgia’s tourism attractions are annually making millions of tourists all over the world pick Georgia as their destination. Tourism can make the economy of a country thrive. That is because of the versatility of needs soars in the presence of tourists.
Tourism is, by itself, one of the main divisions in Georgia you can invest your money in. Furthermore, there are many other fields you can invest in, all of which grow and grow every day due solely to the presence of millions of tourists in Georgia. Tbilisi and its neighborhood are alone able to put your business on the right track.
8. Georgia’s economy is growing so fast.
The GDP stands for Gross Domestic Products. It measures the market value of all the final goods and services produced in a specific period. The GDP of all countries in the world is announced often annually. The GDP of Georgia has been permanently increasing in recent years.
Georgia’s GDP expanded 4.9% year over year in March 2019, following a growth of 4.5% in the previous quarter. This can simply shed light on how fertile your business can ever be in Georgia if you invest in one of the prosperous realms we are going to discuss below.
What are the opportunities to invest in Georgia today?
Considering the fact that Georgia’s economy is reaching success peaks so quickly, it is not wrong to say that you can invest in many realms in this country and sleep with a free mind at night. Here are the most reliable fields you can invest in, in Georgia:
Since 2004, the domestic demand for electricity has been rising significantly. What is the result? Georgia became a net exporter of electricity between 2007 and 2011. There are several power plans in Georgia already under construction. Once the construction finishes, exports are forecasted to grow more and more, especially in the summer period.
Since 2008, Georgia has had a liberalized and deregulated market of energy. There are no tariffs defined for a newly constructed power plant. Investors are free to pick a market and negotiate the price.
Turkey is one of the most desirable markets for the electricity generated in Georgia. Turkey stands first in Europe and second globally after China in terms of electricity demand increase. The country experiences the scarcity of electricity during the summer, while Georgia enjoys a generation surplus.
2. Real Estate and Hospitality
This is one of the fastest-growing sectors of the Georgian economy. Georgia has had a constantly growing number of visitors during recent years; in 2018, around 8.7 million visitors visited Georgia, while the population of the country is 3.7 million people.
Georgian people enjoy natural and cultural resources since the country holds in it more than 12,000 historical and cultural monuments, four of which have been added to the list of UNESCO World Heritage Sites.
Georgia connects Asia to Europe through three international airports. The country has a Visa-Free Regime with citizens of 94 countries all over the world. According to the World Tourism Organization, Georgia has one of the fastest-growing rates of tourist arrivals among all Europian countries. More and more people are visiting Georgia every year, seriously!
Investors in Georgia can develop hotel and leisure, residential, retail, and office premises. The country stands 6th on the Global Retail Development Index published in 2015. Investors can benefit from the high demand for “A class” office buildings and entertainment facilities.
Georgia’s inborn advantage as a bridge connecting Europe and Asia makes investors benefit to a high extent in the manufacturing sector of the whole economy. Manufacturing in Georgia holds 11% of total GDP and 5% of the workforce employment.
The average salary of an employed worker in the manufacturing industry in Georgia is 355 dollars. According to the high unemployment level in Georgia, salary is expected to remain constant. Plus, companies can take advantage of Free Training Opportunities; there are numerous centers around Georgia providing expert courses in practical fields, many of which are financially supported by the government.
4. Regional logistics hub
The special location of Georgia makes it a highly strategic county over the map, acting as an energy corridor to the Caucasus and Central Asia. This corridor is based on the historical Silk Road passing through the country.
The transportation economy in Georgia revolves around the transit. This transportation flow is breathing new life into the historical route between Europe and Asia for trading.
Asian landlocked countries can benefit from Georgia’s geographic location as an entry gate to export oil, coal, zinc, copper, etc.
Among the three essential roads connecting Asia to Europe, the road through Georgia is the most reliable and secure one. This reliability comes from the stable economy and politics of Georgia. Additionally, the Suez Channel has reached its maximum capacity, so many countries are considering new, reliable routes.
5. Agriculture and food processing
Traditionally, and even now, agriculture is still considered to be a strong bone of total Georgia’s GDP. Agriculture and agribusiness are in general shaping 9.2 percent of the GDP and 17.5 percent of trade volume.
Georgia enjoys a highly versatile climate, varying from cool and dry to warm and humid. This various climate type is in favor of agriculture, hence letting the farmers help the economy more and more by their agricultural deeds. They can produce a wide variety of vegetables, grains, fruits, etc.
The expenditures an investor faces when investing in agriculture, including the workers’ salaries, are low enough not to worry about the process risks. Water resources, energy, and other utilities are easily accessible and cheap in Georgia.
Tourism is what Georgia has been working on magnificently during recent years. As a result, this sector can be known as the fastest-growing one in the country, developing a myriad of small business opportunities throughout the country.
What’s more, the climate in Georgia is as versatile as you can pick an area of your interest to embark on your new business. There is a huge number of absolutely stunning resorts in the country where you can take advantage of in favor of your business.
In addition to all the resorts, there are numerous branches of international hotel chains in Georgia. One can find much investment potential regarding solely the hotels in touristic districts.
Where are the investors in Georgia from?
Many of the investors in Georgia are actually firms or individuals from other countries. The Foreign Direct Investment (FDI) is defined as an investment made by a firm or individual in one country into business attractions in another country. According to the charts published by the National Statistics Office of Georgia (GeoStat), the country has received a total of 1.26 billion dollars in the form of foreign direct investment in 2018.
Again according to GeoStat, the majority of foreign investors are from Azerbaijan, The United Kingdom, and The Netherlands. In brief, the top 10 investor countries of Georgia from 1996 to 2017 are as follows:
- Azerbaijan | 2,375 million dollars
- The United Kingdom | 1,886 million dollars
- The Netherlands | 1,686 million dollars
- The USA | 1,510 million dollars
- Turkey | 1,396 million dollars
- UAE | 773 million dollars
- The Virgin Islands | 666 million dollars
- Russia | 633 million dollars
- The Czech Republic | 591 million dollars
- Luxembourg | 559 million dollars
To sum up, we should say that Georgia is a great country. Invest in Georgia and see how fast your money returns. The country has a special geographic location on the map. What’s more, doing business is really easy in Georgia, even easier than doing business in the USA and the UK. The country’s economy is growing fast and is free of corruption. Additionally, the taxes are low in Georgia and the country is overflowing with skilled workforces too.
You can invest in Georgia in many thriving sectors. Sectors such as energy, real estate, hospitality, manufacturing, regional logistics, agriculture, and tourism are the main ones you can invest your money in.
The investors in Georgia are mostly from Azerbaijan, The United Kingdom, and The Netherlands. Additionally, investors from the USA, Turkey, UAE, The Virgin Islands, Russia, The Czech Republic, and Luxembourg bring their money to Georgia too.
So, are you going to invest in Georgia now?