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Doing business with

Doing business with. WHY? WHERE? HOW?. GEORGIA: COUNTRY OVERVIEW. Budget deficit: 3,2% of GDP Inflation rate: 4% Total Public Debt to Nominal GDP: 41 , 5 % Unemployment: 12,4% Foreign Direct Investment: 1,35 bln USD Foreign Trade: 9,9 bln USD. Area: 69,700 km2

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Doing business with

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  1. Doing business with WHY? WHERE? HOW?

  2. GEORGIA: COUNTRY OVERVIEW • Budget deficit: 3,2% of GDP • Inflation rate: 4% • Total Public Debt to Nominal GDP: 41,5% • Unemployment: 12,4% • Foreign Direct Investment: 1,35 bln USD • Foreign Trade: 9,9 bln USD • Area: 69,700 km2 • Population: 3,7 mln • Capital: Tbilisi (1,1 mln population) • GDP: 13,9 bln USD • GDP per capita: 3743 USD • Budget revenue: 8,5 bln GEL

  3. GDP STRUCTURE 2015

  4. FDI STRUCTURE 2015 * EU – 37%

  5. Bilateral Trade between Georgia and Latvia

  6. Investment from Latvia During first 2 Q of 2016 the investment was 5,5 mln USD

  7. WHY? » Politically stable and growing investment and business destination Since 2010: GDP increase by 26%, FDI increase by 66%, Volume of Trade increase by 26% 2016 (I-VI) FDI amounted to USD 834 million: 11% up from the same period of 2015.

  8. WHY?» DOING BUSINESS IS EASY – SIMPLE TO OPEN AND OPERATE • Number 1 country for reforms during last 12 years (WB) • Less bureaucracy – few procedures • Cheap – opening of a company within 24 h costs 8 €, on the same day 19 € • Opening of a company and owning a real estate is allowed for non-residents, without restrictions • Opening of a bank account – 1 day

  9. WHY? » DOING BUSINESS IS EASY – SIMPLE TO OPEN AND OPERATE

  10. WHY?» EFFICIENT, PRO-BUSINESS AND CORRUPTION-FREE GOVERNMENT Ease of Doing Business (2017, WB) Index of Economic Freedom (2016, HF)

  11. WHY?» EFFICIENT, PRO-BUSINESS AND CORRUPTION-FREE GOVERNMENT Global Corruption Barometer Percentage of users paying a bribe in registry and permit services Percentage of users paying a bribe to tax authorities in the past year

  12. WHY?» INCREASE OF MARKET SIZE BY FREE TRADE AGREEMENTS • EU Association Agreement signed in 2014 (includes the DCFTA) • EU became Georgia’s 1st trade partner • Georgia is expecting Visa Free regime with the EU in the nearest future

  13. WHY? » INCREASE OF MARKET SIZE BY FREE TRADE AGREEMENTS • Access to 2,3 billion market without customs duty. Free trade agreements with the EU, EFTA, China, Turkey, Ukraine, CIS countries • Simplified trade regime with USA, Canada, Japan, Norway and Switzerland, additional 500 million consumer market • Working on free trade agreements with the USA • Member of WTO • Customs clearance in 15 minutes • 80% of goods free from import tariffs

  14. WHY?» TAXATION – LOW, SIMPLE, FAIR • No social tax, capital gains, wealth or inheritance tax • Taxes can’t be increased without national referendum • Total tax rate – Georgia ranks number 9 out of 140 countries • Dividend tax only 5% *Micro-enterprise company tax 3-5% *Corporate income tax will be applied to distributed profit; undistributed profit reinvested in a company will not be subject to income taxation

  15. WHY? » STABLE FINANCE AND BANKING SECTOR BB- Stable BB- Stable Ba3 Positive 14 international banks 6 local banks

  16. WHY?» COMPETITIVE LABOUR FORCE • Young force – 50% of unemployed population are aged between 20-34 • Flexible labor code – all ILO core conventions are ratified by Georgia • Average salary in 2014 – 490 USD • Vocational Education Training Centers around Georgia

  17. WHY?» NEW SILK ROAD CONCEPT – UNIQUE OPPORTUNITIES FOR BUSINESS • Georgia is a geopolitical and geographical hub that connects Europe and Asia • It is among the countries of a historical “Silk Road” route • On 15-16 October 2015, Tbilisi hosted a Tbilisi Silk Road Forum

  18. WHY?» economy’s development plan 4-point reform plan of the Government of Georgia • Improvement of business environment : In case of reinvesting the income, the enterprises will be exempt from the corporate income tax. • Open governance and inclusiveness enhancement : The Business House – a unique platform encompassing the delivery of more than 600 types of public services in one building. • Development of the framework infrastructure: Construction and modernisation of highways and railway, connecting Georgia’s regions and ensuring speedy transit and increasing its capacity. • Higher education reform: Public financing of the most needed professions requested by certain industries in the nearest 5 years.

  19. DOING BUSINESS WITH GEORGIA»WHERE?

  20. WHERE?» ENERGY SECTOR • The second richest hydro resources per capita in the world; only 20% of total hydro potential is utilized • Energy generation cost is the lowest in the region • Well-developed power transmission infrastructure, linking the country with all neighbors • 6 big (more than 100 MW) HPP projects on the pre-feasibility study level (installed capacity of 2,950 MW) • 15 HPP projects are under construction and 15 HPP projects are awaiting permits (installed capacity of 1,900 MW)

  21. WHERE?» ENERGY SECTOR International projects • The Western Route Export Pipeline (Baku-Supsa Oil pipeline) • Baku-Tbilisi-Cayhan oil pipeline • The South Caucasus Pipeline (natural gas pipeline)

  22. WHERE?» HOSPITALITY AND REAL ESTATE • Fast growing sector • No real estate ownership restrictions • Very low crime-rate • Rich natural and cultural resources • Continuous increase of international visitors (10 times increase since 2005) International travelers (mln)

  23. WHERE?» HOSPITALITY AND REAL ESTATE

  24. WHERE? » HOSPITALITY AND REAL ESTATE • Winter Resorts: Mestia, Gudauri, Bakuriani, Goderdzi • “Sun-Beach” Resorts: Batumi, Gonio, Anaklia, Kobuleti & others • Four Season Resorts: Mestia, Gudauri, Bakuriani, Goderdzi, Kazbegi • Medical & Wellness Resorts: Tskaltubo, Akhtala, Borjomi, Abastumani • Gambling: Tbilisi, Batumi

  25. WHERE?» manufacturing • 11% of GDP • 5% of employment with average salary of410 USD • 2 Free Industrial Zones (In FIZ businesses are exempted from all tax charges except Personal Income Tax) • High Technology and Innovation Development Center (Tbilisi) – advanced laboratory equipment, development of innovative projects • Highly attractive regional production opportunities: chemicals, plastics, construction-building materials and finishing elements • Production/Export of copper ores and waste, scrape, ferro-alloys • Regional import substitution opportunities –iron, steel, aluminum and copper products

  26. WHERE?» AGRICULTURE AND FOOD PROCESSING • 9,2% of GDP; 1,5% of FDI; 17,5% of trade volume • Average salary 305 USD • 22 micro-climates from cool and dry to warm and humid - this results in a longer harvesting season and a wide range of growing conditions • Main export products: • Wine and other alcoholic beverage accounts 35% of agriculture exports • One of the global exporters of nuts, ideal growing conditions, commitment from Ferrero • Well-reputed for lamb quality, significant export potentials to Middle Eastern markets

  27. WINE MAKING – GAUMARJOS!

  28. WHERE?» AGRICULTURE AND FOOD PROCESSING • Other export opportunities – citruses, fruits, sheep meat, etc; • Opportunities for processing – tomatoes, apples, cucumbers, potatoes, stone fruits, citrus, olive oil, etc; • Import substitution opportunities – poultry, beef, port, dairy products (milk yogurt, butter),etc.

  29. WHERE?» Regional Logistics Corridor & Services Hub • Natural gateway between Europe and Central Asia • Up to 60% of overland international freight are transits • Rapidly developing road infrastructure • Ports are cost-competitive compared to alternative routes • Services account 53% of GDP • Opportunity to capitalize: IT/BPO services; regional headquarters; retail hub as the destination-of-choice for shopping • Construction, Transports and Communications were the highest contributors to FDI with 50% of total inflow • Services have a major share of FDI inflow - 73%

  30. how?» Access to Finance and Incentives & Consulting

  31. SUCCESS STORIES» ANAKLIA DEEP SEA PORT • 1,5 bln USD investment capability • Berths for PanaMax and larger sizes ships • Annual cargo turnover: in 3 years – 7 million tons; in 12 years – 100 million tons

  32. success stories» iron silk road kars-tbilisi-baku t • Initial annual volume - 6,500 million tons annually • The 1st train from China has already arrived on 13 December, 2015! • 4 times faster and cheaper than other routes from China to Europe

  33. SUCCESS STORIES» 280 MW HPP “nenskra” • Project of Georgian Partnership Fund and Korean company “K Water” • Potential generation of electricity is going to be 1.2 billion kw/h • Total investment amounts 1 billion USD

  34. Address: Rainabulvaris 3, RigaTel: 67-213136Email: riga.emb@mfa.gov.gewww.latvia.mfa.gov.geFacebook: Embassy of Georgia to Latvia

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