Invest in Georgia

Georgia’s key geographic location

Georgia is part of the famous historical Silk Road, connecting Western Asia and Eastern Europe like a bridge. Georgia’s role as a crossroads between Europe and Asia has made its location strategically important, which makes it easier to conduct international business, transact international affairs and make foreign investments.

Georgia is bordered by the Black Sea on the west, Russia on the north, Turkey on the south-east, Armenia, and Azerbaijan on the south-west. Being near the sea opens up many economic opportunities for Georgia, and not only the sea but the land itself is distinguished by rich resources. This country is the best investment place for Asian businesses working between China and Europe.

The ease of doing business in Georgia is incredible

The World Bank Group publishes a report every year to gauge the ease of doing business in numerous countries around the world. This is done to help businesses, promote international trade and help governments provide investment funds. Georgia’s position in this list is impressive as it is holding 6th place in the global ranking by May 2018.

What does high ease of doing business mean at all? It means that the legal system is incredibly supportive of starting and operating a business in the country. A ranking has been produced, taking 10 topics into account, each with many measures to determine the quality of a particular case. Therefore, Georgia is the place where starting a new business is easy and affordable for investors.

Corruption-free economy

Corruption is seen to hinder successful careers several times. The importance of avoiding corruption to keep your professional pursuits on track cannot be emphasized enough. Before investing in a country, it’s best to make sure you know about its corruption status. The fact that they are corrupt can have any number of negative consequences for your business. Speaking of Georgia, it is important to note that the economic crisis has been continuing to improve.

Transparency International has released the CPI since 1995 and can help businesses be as transparent as possible. The index is used to rate governments based on their efforts to stop corruption in the country’s business world. The index ranks countries’ perceived levels of corruption by using expert assessments and opinion surveys. This allows experts and organizations to evaluate the level of corruption around the globe, making it easier for countries to understand how corrupt their government is. So, what is the rank of Georgia based on this index?

Georgia is starting to see a huge rise on this list because they’re making improvements across the board and holding the 41st position among 180 countries. Recent years have seen more and more improvement in the record, making it a low-risk endeavor in Georgia.

Taxes are significantly lower in Georgia

Taxes are on the decrease in Georgia. The main reason behind this is that the government is using this approach to absorb foreign trade and investments. If more and more international companies start functioning in the territory of Georgia, it is beneficial for the country. That is why the taxes only account for only basic business taxes.

You may wonder what is Georgia’s position in the terms of taxes. According to the World Economic Forum report (2016-2017), Georgia has one of the lowest taxes worldwide, with 1 16.4% rate and 9th position. The main advantage of Georgia is that there are significantly low tax rates and a transparent system for any business.

At the moment, six flat taxes have been introduced in Georgia:

• Income tax – 20% (flat-rate)
• Corporate tax – 15%
• VAT – 18%
• Excise tax – on a 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.

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

The labor force of Georgia is skilled and competitive

According to the Heritage Foundation, with the cooperation of The Wall Street Journal, Georgia holds a pretty high score in the Heritage Foundation ranking, which states that the economy in this country is free. The current score of Georgia’s economic freedom is 75.9 (out of 100). This statistic proves that the labor environment in Georgia is one of the most liberal and competitive.

Georgia has an abundance of qualified and talented workers for any employer to come across. A lot of these workers are multilingual and have an education from a prestigious Western university. The most widely spoken languages are English and Russian here, but a lot of people know other European languages too. The average monthly salary in Georgia is about 420 dollars per month. This is a relatively low salary in comparison to European countries, which gives businesses more opportunities. Therefore, hiring skilled and talented staff in Georgia is not as costly or difficult as you might have thought.

Georgia is full of amazing tourist attractions

You would not be wrong if you compare some parts of Georgia with heaven. The country offers numerous stunning tourist attractions you cannot close your eyes on. Georgia’s tourist attractions are making millions of tourists all over the world more and more each year. So, tourism has many benefits for a country. The effect of tourism on the economy is by far one of the most important ones.

Georgia has many investment options, and one of the main sectors is tourism. If you want to invest in something, that’s a great place to start. In addition, there are many other fields you can invest in, all of which are growing due to the millions of tourists. Tbilisi is a great place to do business, as it has a lot of established quality and steady demand with an abundance of growth opportunities.

Dazzling growth of Georgia’s economy

In economics, GDP is the amount of “Gross Domestic Product” (your nation’s total production). It measures how much the society has produced during a specific period in goods and services. The GDP of all countries in the world is mentioned frequently and each year by many sources. The GDP of Georgia has been growing increasingly in the last few years. 

The GDP of Georgia has grown 4.9% in the first quarter of 2019 and is continuing to progress at a steady rate. This can simply shed light on how successful 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?

Georgia’s economy is on the uptick, so it seems like there are a lot of opportunities to invest in and make money. You can still sleep well at night with the knowledge that Georgia’s economy is trending positively. Here are a few fields that are growing in Georgia and provide reliable opportunities:

1. Energy

Since 2004, there has been an increase in the use of electricity domestically. The result of Georgia’s electricity production is that the country became a net exporter. There are several electricity plans in the state of Georgia already. Once the construction process is finalized, exports are predicted to get more and more competitive, especially during the summertime

Since 2008, Georgia’s energy market has been deregulated, allowing for a variety of suppliers. There are no tariffs established for a newly constructed power plant. This allows investors to negotiate the price they will pay without being limited by the rates mentioned in their contract.

Georgia is one of the most desirable markets for generating electricity. Turkey wants this energy source to increase its exports. Turkey has been and continues to be a leading country in terms of electrical demand growth and is first in Europe and second globally after China. This opens up great business opportunities for investors interested in energy.

2. Real Estate and Hospitality

One of the fastest-growing sectors of the Georgian economy is Real Estate. Georgia has had a continually growing number of tourists, with more than 8.7 million visiting in 2018. While the country has a population of 3,7 million people, there are also plenty more to explore what it has to offer.

Georgians are blessed to live near some of the most spectacular natural and cultural resources. These monuments add so much to the already amazing Georgian culture and lifestyle. This country is full of UNESCO world heritage sites.

Georgia has several international airports connecting Asia to Europe. The country has a visa-free regime with citizens of 94 countries, allowing these international travelers to visit Georgia and enjoy all that it has to offer. Georgia’s tourism is one of the fastest-growing in Europe, and that trend is expected to continue.

There are numerous opportunities for investors in Georgia, like hotel and leisure, residential, retail, and office premises. If we look at the Global Retail Development Index published in 2015, Georgia holds 6th place, which explains why these fields grow so fast. Investors can get their pick of one “A-class” office building or multiple premium entertainment facilities.

3. Manufacturing

Georgia’s unique geographic location makes it a valuable place for manufacturing and other industries. Manufacturing in Georgia contributes to approximately 11% of the nation’s GDP and 5% of the workforce. The average salary for an employed worker in the manufacturing industry is $355, which is way lower than European salaries. While Georgia’s unemployment level is high, employee salaries are expected to stay the same or increase a little bit due to other factors such as the cost of living and the economy. In addition, companies can use Free Training Opportunities around Georgia, many of which are financially supported by the government.

4. Regional logistics hub

Georgia is a highly strategic county lying on the map and providing an energy corridor to the Caucasus and Central Asia. This corridor is based on the historical Silk Road, a long-distance trade route that passed through China.

The transportation economy in Georgia revolves around transit. The number of travelers on the Silk Road is increasing which has revitalized this historical trade route. Asian countries with landlocked borders 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 one through Georgia is the most reliable and secure. Of course, the reliability depends on the stable economy and political situation of the country. In addition, the Suez Channel is already used with its maximum capacity, so numerous countries are searching for a new route.

5. Agriculture and food processing

Though not always a strong contributor to state GDP, agriculture remains a vital sector in Georgia’s economy. Agrobusiness is generating 9.2% of GDP and 17.5% of general trade volume.

The potential of agriculture is highly dependent on the soil and climate of the country. Georgia has different climate types, making it suitable for numerous plants. This diverse climate and soil make it easier to produce high-quality crops, which, in turn, can help the agricultural economy. Georgia can produce a wide variety of vegetables, grains, fruits, etc.

Farmers and investors can take advantage of the low expenses associated with agricultural investments and strive for being profitable. Georgia has great water resources, is energy-friendly, and has other accessibility options at a cheaper price than other countries in Europe.

6. Tourism

Tourism is making massive strides in Georgia, and the government has pledged to continue promoting it as the main occupation of Georgians. As a result of this, the country is starting to embrace small businesses and has many opportunities for entrepreneurs looking to pick up and start their own businesses.

As you can pick from a variety of different areas in Georgia, it’s the perfect place to start your new business. There are a lot of absolutely stunning resorts in the country, both near the sea and mountings. In addition, tourists can enjoy high-quality international hotels in Georgia. So, there is huge investment potential in touristic districts.

Where are the investors in Georgia from?

Most of the investors in Georgia are firms or individuals from other countries. Foreign Direct Investment (FDI) is a type of investment that’s made by a firm or individual in one country into business attractions in another country. According to the charts published by GeoStat, Georgia received a total of $1.26 billion in foreign direct investment in 2018. The majority of foreign investors are from Azerbaijan, the UK, and the Netherlands according to GeoStat. In brief, the top 10 investor countries of Georgia from 1996 to 2017 are as follows:

1. Azerbaijan | 2,375 million dollars
2. The United Kingdom | 1,886 million dollars
3. The Netherlands | 1,686 million dollars
4. The USA | 1,510 million dollars
5. Turkey | 1,396 million dollars
6. UAE | 773 million dollars
7. The Virgin Islands | 666 million dollars
8. Russia | 633 million dollars
9. The Czech Republic | 591 million dollars
10. Luxembourg | 559 million dollars

Summary

Georgia is a country where the economy is growing, the business environment is improving, and numerous beneficial opportunities are created for businesses. In addition, it is very pro-business, which makes doing business in this place very easy. The US and the UK aren’t as friendly to businesses and thus have more restrictions than Georgia. With the rapid growth of the economy and the low rate of corruption, this place is even more attractive for investors. Additionally, the taxes are low in Georgia, and the country is overflowing with a skilled workforce.

Georgia offers opportunities in a large number of profitable niches. Sectors such as energy, real estate, hospitality, manufacturing, regional logistics, agriculture, and tourism are the ones you can invest your money and get a real profit.

What’s stopping you from taking a step toward your dreams? You must be looking for the perfect country to start your investment – Georgia is the answer to your prayers! Since the country has all the features that make starting a business easy and profitable.

Investment in Georgia is the best option for your business. Do not miss the opportunity – invest today.