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flag Georgia Georgia: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Georgia | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

Foreign direct investment dropped in Georgia since 2009, mainly due to the conflict with Russia in South Ossetia in summer 2008. Aside from the economic and financial difficulties, political stability is a key reason for the attractiveness of the country.

To attract investors, the country offers many tax and legislative benefits. The Georgian economy has been almost fully liberalized and it is now one of the most interesting countries in the region. Corruption, historically very present at intermediate levels, has been eradicated, which meant a major breakthrough in terms of attracting FDI. According to the Transparency International rating, in 2013 the country ranked better than Italy or Brazil, ranking 51st of 174 countries surveyed.

The main investors are the Netherlands, the United States and Turkey. FDI reached 860 million USD in 2013, is still struggling to regain 2007 levels at USD $2 billion.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Georgia Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 9.0 7.0 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 7.0 5.9 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 1,0489111,010
FDI Stock (million USD) 9,52610,45411,676
Performance Index*, Ranking on 181 Economies 60--
Potential Index**, Ranking on 177 Economies 104--
Number of Greenfield Investments*** 302119
FDI Inwards (in % of GFCF****) 32.323.225.1
FDI Stock (in % of GDP) 66.066.072.2

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Georgia

Strong Points
Georgia's competitive advantages are:
- Its geographical location, which gives it an important geostrategic position since the oil pipelines transporting Caucasian oil to Europe all pass through its territory;
- A low corporate tax rate;
- Simplified company registration procedures;
- The highest literacy rate in the world;
- A government that wants to attract foreign investment, and takes appropriate measures.
Weak Points
The country's main weaknesses are:
- The limited domestic market;
- The instability of its relationship with Russia; and
- The corruption problems that affect the country.
Government Measures to Motivate or Restrict FDI
The Georgian government has established a range of measures in order to develop the country's economy:
- The privatization of public companies;
- The fight against corruption;
- Establishing a principle of non-discrimination between Georgian and foreign businessmen;
- Drastically reducing the procedures for forming a company;
- Reduction of corporate tax; and
- Liberalization of the employment market.
Bilateral Investment Conventions Signed By Georgia
List of signatory countries.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Freedom to take holdings is guaranteed.
Acquisition of Holdings
There are no restrictions on acquiring of a company by a foreign national or a foreign company in Georgia. Because of the changes to the Tax Code and Law on Entrepreneurs in 2005 and 2006, acquisition of a company is has been made simple and efficient.

The property, investments and the rights of investors are protected and guaranteed by law in Georgia. Property rights are guaranteed by article 21 of the Georgian Constitution. The law defines simple and well defined mechanisms to make investments, to acquire (or transfer) properties and companies in the country.
According to the constitution of Georgia international treaties have direct legal force in Georgia, which ensures a liberal legislative environment for conducting business and making investments in the country.
Obligation to Declare
The agency for the promotion of foreign investment in the country gives information about the authorizations required to set up business.
Competent Organization For the Declaration
Ministry of Finance
Requests For Specific Authorizations
There are no limits for foreign ownership.

Learn more about Foreign Investment in Georgia on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Agency for the Promotion of Foreign Investment
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Georgia
Globaltenders, Tenders & Projects from Georgia
DgMarket, Tenders Worldwide
 
 

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Learn more about Investing in Georgia on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: October 2014