Georgian National Investment Agency 2013

I NVESTMENT CLI MATE &

OPPORTUNI TI ES I N GEORGI A
NNN IN
IN NVEST IN IN
NNNN
GEORGIA GEORGIA GIA G
NNNNNN
VEST
ORGIA
www.investngeorgia.org 1
ADVANTAGES OF GEORGIA
Business friendly environment with low levels of taxation, simple and fair tax administration
Efficient, pro-business and corruption-free government
Enlargement of market size by Free Trade Agreements
Solid sovereign balance sheet
Stable and conservatively managed banking sector
Multi-modal maritime, land and air access infrastructure for trade, logistics and manufacturing
Stable and competitively priced energy supply
Flexible labor legislation
Very low crime rate
1 REFORMER IN THE WORLD OVER THE PAST 5 YEARS WORLD BANK
GEORGIA - SOVEREIGN CREDIT RATINGS
BB- Stable
(Upgraded from B+ Positve
in December 2011)
Ba3 Stable
(A rmed in August
2012)
BB- Stable (Upgraded
from B+ Positve in
November 2011)
IN
IN GEO
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DOING BUSINESS IN GEORGIA
Countrys impressive progress in improving business climate has
been well documented in a number of internatonal indices.
EASE OF DOING BUSINESS INDEX OF ECONOMIC FREEDOM
Source: World Bank, 2013
(Rank out of 183 countries)
Source: The Heritage Foundaton, 2013
(Rank out of 183 countries)
Up from 112 in 2005 Up from 99 in 2005
IN
1
4
7
9
20
32
34
49
67
71
91
112
137
Slngapore
unlLed SLaLes
unlLed klngdom
CLC8ClA
Cermany
Armenla
lrance
kazakhsLan
Azerbal[an
1urkey
Chlna
8ussla
ukralne
GEO N
137 7
1
10
14
19
21
38
62
68
69
88
136
139
161
Pong kong
unlLed SLaLes
unlLed klngdom
Cermany
CLC8ClA
Armenla
lrance
kazakhsLan
1urkey
Azerbal[an
Chlna
8ussla
VEST
ORGIA
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CORRUPTION FREE COUNTRY
Georgia today is essentally a corrupton-free investment
destnaton where rule of law have been given the right way
S
RGIA 3
26
16
33
78
77
of survyed who
clalm LhaL Lhe level
of corrupuon has
decreased ln Lhe
pasL Lhree years
of survyed who
assess Lhelr currenL
governmenL's acuon
as eecuve ln Lhe
ghL agalnsL
corrupuon
0
1
1
2
2
2
2
3
3
7
9
9
22
26
uenmark
norway
uk
SwlLzerland
neLherlands
korea (SouLh)
Cermany
CLC8ClA
unlLed SLaLes
lrance
AusLrla
Slngapore
Armenla
8ussla
Percentage of users
paying a bribe from in
the past 12 months
Source: Transparency Internatonals Global Corrupton
Barometer , 2011 (Rank out of 176 countries)
GEORGIA SOUTHEAEST EUROPE+TURKEY EU
GLOBAL CORRUPTION BAROMETER
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ECONOMIC STRUCTURE AND TRENDS
GDP: STRONG REBOUND IN 2010 AFTER
A RELATIVELY SMALL CONTRACTION IN
2009, ROBUST GROWTH POTENTIAL
RAPIDLY GROWING GDP
PER CAPITA
3.1
6.4
7.8
10.2
12.8
10.8
11.6
14.4
13.9
17.9
3.9
9.6 9.4
12.3
2.3
-3.8
6.3
7.2
7.3
6.3
-8
-4
0
4
8
12
16
0
2
4
6
8
10
12
14
16
18
20
2004 2003 2006 2007 2008 2009 2010 2011 2012L 2013l
nomlnal Cu (uS$bln) 8eal Cu growLh, y-o-y ()
IN
1,188
1,484
1,764
2,313
2,921
2,433
2,623
3,231
3473
3699
0
1,000
2,000
3,000
4,000
2004 2003 2006 2007 2008 2009 2010 2011 2012L 2013l
u
S
$

Cu per caplLa
IN
ManufacLurlng
17.3
1rade 17.3
ubllc
AdmlnlsLrauon
11.7
1ransporL &
Communlcauon
s 10.6
AgrlculLure 9.3
PealLhcare &
Soclal
AsslsLance 6.1
ConsLrucuon
6.2
Lducauon 4.3
CLher secLors
16.9
BROAD-BASED AND DIVERSIFIED
NOMINAL GDP STRUCTURE 2011
STEEPER THAN EXPECTED
GROWTH TRAJECTORY
Initally planned at 6%, Georgias GDP real
growth in three quarters of 2012, equaled to
7.5%
2011 OUTCOMES:
Tax collecton increased 26% y-o-y
VAT turnover increased 26% y-o-y
Commercial bank lending to the real sector
increased 24% y-o-y
Trade turnover increased 36% y-o-y
VEST
ORGIA
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PREFERENTIAL TRADE REGIMES:
FTA with CIS countries: Ukraine, Belarus, Azerbaijan, Armenia, Russia,
Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan
FTA with Turkey
DCFTA with EU will be signed next year
Negotaton on FTA with USA is in progress
GSP+ with EU - 7200 products to the EU market duty free or with lower taris
GSP with USA, Norway, Switzerland, Canada, Japan - lower taris are applied on
3400 goods exported from Georgia to these countries
Member of WTO
LIBERAL TRADE REGIMES
OPPORTUNITY - MARKET SIZE
Populaton of Georgia - 4,5 million
Existng FTA +350 million
DCFTA + 0,5billion
TOTAL ~ 0.9 BILLION
Georgia: 4,5 million population
Access to the 0,9 billion market
A
KET SIZE
lation
market
CUSTOMS
Very simple and service
oriented customs policy and
administraton
Almost no custom duty - 90
percent of goods free from
import taris
No quanttatve restrictons
G
e
org
i
a
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TAXATION IS SIMPLE, LOW, EFFICIENT AND FAIR
No payroll tax or social insurance tax
No capital gains tax
No wealth tax and inheritance tax
Foreign-source income of individuals fully exempted
Accelerated depreciaton on capital assets
Loss carry forward for corporate prot tax purposes (10 years)
No restrictons on currency convertbility or repatriaton of capital & prot
Double taxaton avoidance treates with 40 countries
O
IN
'04 '0S '06 '07 '08 '09 '10 '11 '12
Number of 1axes 21 7 7 7 6 6 6 6 6
VA1 20 20 18 18 18 18 18 18 18
Income 1ax 12-20 12 at 12 at 12 at
Soc|a| 1ax +
Income 1ax
32 2S
Soc|a| 1ax +
Income 1ax
20
20 20 20
Soc|a| 1ax 33 20 20 20 - - - - -
Corporate roht
1ax
20 20 20 20 1S 1S 1S 1S 1S
D|v|dend &
Interest
Income 1ax
10 10 10 10 10 S S S S
VEST
ORGIA
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LEADER IN FORBES RATING (TAX MISERY & REFORM INDEX)
VEST
OR
VEST
According to 2009 Tax Misery & Reform Index, released by Forbes
Business & Financial News, Georgia is the fourth least tax burden
country afer Qatar, UAE and Hong Kong
IN
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LABOR AVAILABILITY
Young labor 50% of unemployed population are aged between 20-34
Average monthly salary in 2011 377 USD
Vocational Education Training Centers around Georgia provide professional courses in
different types of practical subjects and most of the courses fees are financed by the
Government of Georgia.
GEORGIA - ONE OF THE MOST LIBERAL LABOR ENVIRONMENTS (3RD BEST
GLOBALLY), ACCORDING TO THE HERITAGE FOUNDATION, 2012
O IN GEO IN GE
60.0
70.0
80.0
90.0
100.0
110.0
2003 2006 2007 2008 2009 2010 2011 2012
Source: MOF and Heritage Foundaton, 2012
GREATER LABOR FREEDOM
GEORGIA
FRONTIER MARKETS AVG
VEST
ORGIA
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Strong and Rising FDI Stimulates Economic Prosperity
Key Industries Benefit from FDI
Reinvestment 30% (2011)
Georgia has bilateral treaties on investment promotion and protection with the 32 countries
(negotiations launched with 24 countries)
FOREIGN DIRECT INVESTMENT
FDI BREAKDOWN BY SECTORS 2011 FAVORABLE FDI/GDP RATIO
G RGIA GGIA
Lnergy, 18
CLher
secLors, 17
llnanclal
secLor, 13
ConsulLancy,
12
ManufacLurl
ng, 11
1ransporL
and
Communlcau
on, 11
8eal LsLaLe,
8
ConsLrucuon,
4
Mlnlng, 4
A
7
8.S
9.7
7.0
1S.3
19.8
12.2
6.1
7.0
7.8
0.0
3.0
10.0
13.0
20.0
23.0
0
300
1000
1300
2000
2300
2003 2004 2003 2006 2007 2008 2009 2010 2011
lul lul as of nomlnal Cu
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TOURISM
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INVESTMENT OPPORTUNITIES IN GEORGIA
MANUFACTURING
HYDRO POWER HUB
AGRICULTURE
REGIONAL SERVICE HUB
REGIONAL LOGISTICS CORRIDOR
VEST
ORGIA
www.investngeorgia.org 11
HYDRO POWER HUB
SIGNIFICANT HYDRO POWER POTENTIAL
Installed capacity of > 2,700 MW
Additional potential > 4,500 MW
Generation cost (0.06 USD) among the lowest in the region,
~50% lower than target market Turkey
EXPORT CAPACITY
The only net electricity exporter in the region, with rapidly growing consumption rates
Construction of 400 kV power transmission line from Georgia to Turkey to be
completed in 2013
OPPORTUNITIES
Several large scale projects (> 100 MW)
~ 70 small/medium projects (< 100 MW)
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OVERVIEW OF GEORGIAS (HYDRO-) POWER SECTOR
Domestc: Demand growth and increasing share of renewables
requires an extension of hydropower generaton by around 65%
untl 2020
Export: Georgia is surrounded by countries with a projected
structural power decit (e.g. Turkey, Russia South) or expensive
power generaton, opening up atractve export opportunites
Power generaton accounts for 3% of GDP and ~ 1% of
employment but is of high strategic importance to Georgia
~ 10% of power producton are exported, but Georgia stll needs to
import power during winter
Georgia boosts signicant and economically viable HPP potental
already today 75% of power generated via HPP (2,700 MW) 25%
via thermal (mainly gas)
All new HPPs operate in a liberalized market
Cost of hydropower generaton is very compettve in the region
FDI inows amounted to USD 200 million in 2011 and are growing
65% of economically viable potental not yet exploited
Projects of up to USD 750 million have been concessioned to
investors from e.g. India, Turkey, Czech Republic and other countes.
Pipeline well lled with several large scale projects (100-702 MW)
as well as 70+ smaller projects
STRONG DEMAND
GROWTH PROSPECTS
IMPORTANCE OF
THE SECTOR LOW IN
TERMS OF GDP AND
EMPLOYMENT
POWER SECTOR WITH
STRONG FOCUS ON
COST COMPETITIVE HPP
LARGE PROJECTS HAVE
BEEN PLACED AND
PIPELINE IS FILLED
VEST
ORGIA
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GEORGIA SURROUNDED BY COUNTRIES WITH A STRUCTURAL
POWER DEFICIT OR EXPENSIVE POWER GENERATION
V
R
1urkey
SouLh 8ussla
Ceorgla
Armenla
Azerbal[an
lran
lraq
Creece
8ulgarla
8omanla
kazakhsLan
ukralne
lsrael
Lebanon
uzbeklsLan
1urkmenlsLan
2020
1 Assuming current consumpton and supply patern
2 This does not even include countries with heavily subsidized
electricity generaton (e.g. Azerbaijan, Kazakhstan)
Turkey expected to
have decit of up
to 80-120 TWh by
2020, with seasonality of
its demand matching
Georgias supply
Russias Southern districts
will also experience a
structural decit of up to
40 TWh by 2020
1
In other markets,
Georgias hydropower
is very cost-compettve
compared to local taris
2
STRUCTURAL DEFICIT BY 2020 NO DEFICIT, BUT CURRENT TARIFFS >
GEORGIAS GENERATION COST
AD HOC DEFICITS PROJECTED
NO DEFICIT, BUT SUBSIDIZED TARIFFS
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HYDROPOWER PIPELINE BOOSTS SEVERAL NEW MEGAPROJECTS
ABOVE 100 MW CAPACITY THAT ARE CURRENTLY OPEN FOR INVESTMENT
PROJECT CAPACITY FORECAST INVEST.
VOLUME
USD MILLIONS
READY TO
INVEST?
HYDROPOWER PIPELINE ALSO BOOSTS ~70 SMALL/MEDIUM
PROJECTS (<100 MW CAPACITY) THAT ARE CURRENTLY OPEN
FOR INVESTMENT
NAMAKHVANI CASCADE 450 MW 926
KHAISHI HPP 400 MW 620
ONI CASCADE 270 MW 599
NENSKRA HPP 210 MW 491
TOBARI HPP 200 MW 310
FARI HPP 180 MW 297
LENTEKHI HPP 120 MW 189
N
OOO
VEST
ORGIA
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TOURISM
FAST GROWING SECTOR
Tourism contributes 6.7 % of GDP
Number of visitors increased 38% in 2011 reaching 2.8 million and 56% in 2012 reaching 4.4 million
Majority of visitors come from : Turkey (34.9%), Azerbaijan (21.2%), Armenia (20.5%), Russia (11.6%)
Europe (9.4 %)
Average duraton of stay - 9 days, the median visitor stays - 2days / Average spend of USD 330
Overall capacity of < 15,110 rooms
Already operatng internatonal brand hotels - Sheraton, Radisson, Marriot, Holliday Inn, (under constructon -
Kempinski, Hillton) etc.
POTENTIAL
Youth Olympics in 2015
Free tourism zones summer resorts
Availability of gambling business gaming is partally or completely banned in Russia, Ukraine, Azerbaijan,
Kazakhstan,Turkey, Israel, Iran, Iraq
8 natonal parks
2400 springs of mineral waters
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GEORGIA IS EXPECTING SIGNIFICANT GROWTH
TRAJECTORY IN TOURIST ARRIVALS
INTERNATIONAL ARRIVALS HAVE SEEN ~40% YEAR-ON-YEAR GROWTH
TOTAL INTERNATIONAL TOURIST ARRIVALS
NUMBER OF ARRIVALS INTO GEORGIA
IN GEO
+38 p.a.
+S6 p.a.
+29 p.a.
2013l 2012 2011 2010 2009 2008 2007 2006 2003
0.6
1.0
1.1
1.3
1.5
2.0
2.8
4.4
5.5
VEST
ORGIA
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INTERNATIONAL LUXURY HOTEL CHAINS DOING WELL:
MORE ARE COMING TO THE MARKET
VERBATIMS OF INTERNATIONAL HOTEL BRANDS IN GEORGIA
UPCOMING
INTERNATIONAL HOTEL
BRANDS BEFORE 2015
LOCATION
BATUMI
TBILISI
BATUMI
TBILISI
BATUMI
TBILISI
We have seen 7-8% more guests in our hotels
every year. Business and leisure travelers are our
two biggest client group and they come from all
over the world. Best occupancy period is summer
from May to September
Alexander Kvaratskhelia
Marketng Manager
We have seen signicant increases in occupancy
rate and nancials since 2010. This year [2012] high
season has seen a very promising start. We have
advance reservatons booked for almost the whole
summer
Omer Subasi
General Manager
We are very optmistc as demand has been
increasing rapidly. Hotel occupancy hovers around
85%. Our guests come from all around the world
representng various sectors including business,
sportmen and tourists
Oto Berishvili
Sales & Marketng Manager
HOTEL CHAIN HOTELIERS ASSESSMENT OF PERFORMANCE
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INVESTMENT OPPORTUNITIES IN TOURISM SECTOR
SUN-BEACH
RESORTS
Expansion of
summer sun and
beach franchise
focusing on high-
end segment
All inclusive
summer resorts
New master resort
development
Batumi
Anaklia
Kobulet
Other Black Sea
locatons
WINTER SKI
RESORTS
Master development
of winter resorts
with unique prole
equivalent to the
Alps
Government is
fully commited
to provision
of basic
infrastructure
Mesta
Gudauri
Bakuriani
Goderdzi
SUMMER
MOUNTAINS
RESORTS
Four season resort
value prepositon
Majestc
landscapes
allowing
for a wide range
of summer
tourism actvites
such as trekking,
horse riding, bird
watching and river
racing
Mesta
Gudauri
Bakuriani
Goderdzi
Kazbegi
Other locatons
SPA RESORTS
Development of Spa
Resorts
Include hotels,
Dierent
types of Clinics,
tness,Outdoor
actvites
Tskaltubo
Akhtala
Other locatons
REGIONAL
CASINO CITY
Development of
large-scale
integrated casino
complex to Serve
regional markets.
Include hotels,
casino
entertainment,
family Services
and shopping
Fiscal incentves
available
Batumi
Tbilisi
Other locatons
D
E
S
C
R
I
P
T
I
O
N
P
O
T
E
N
T
I
A
L

L
O
C
A
T
I
O
N
VEST
ORGIA
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Poti
Batumi
Armenia
Azerbaijan
Russia
Turkey
Black
Sea
Kutaisi
MRN
Railway
Kulevi
Tbilisi
FIZ FIZ
MANUFACTURING SECTOR
OVERVIEW:
Manufacturing and industries account for around 14%
of GDP and ~ 5% of employment
Largest industries are food and beverages (3% of total
GDP) and metal products (2.5%)
Advantage to process goods - compettve cost of
power, labor and strategic locaton
2 Free Industrial Zones - In FIZ, businesses are
exempted from all tax charges except Personal
Income Tax
OPPORTUNITIES:
Large import overhang in goods that are usually
not traded extensively provides regional import
substtuton potental in food processing, constructon
materials, household gods etc
Georgias current advantages in terms of handling
large transshipment ows, business stability, low
cost of power generaton and existng raw materials/
intermediate products provide opportunites for
large industrial bets, like producton of iron and steel
products, aluminum etc
Mestia
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TRADE BALANCE IN GEORGIA AND IN THE REGION
IMPORT OVERHANG, USD mln, 2011 TRANSPORTATION
COST
IN
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-6
Chem|ca|s
Iood
Wood, paper and
wooden furn|ture
lndusLry and producL
62
32
111
288 -6 26
-103
32 30
106
-17
3
Georg|a
73
30
42
63
227
122
82
36
283
-273
6
62
73
32
Meat
Da|ry
Seeds]o||s
Co|or|ng mater|a|s
C|ean|ng mater|a|s
Lssenna| o||s, cosmenc
|asncs & rubber
|asncs
kubber
Construcnon
Stone]|aster
Ceram|c
G|ass
Cement
aper
Iurn|ture
Iron]stee| arnc|es
A|um|n|um
Iron]stee|
313 46
39
46 77 30
1,273
20
20
769
66 46
7,997
168
118
-722
140
63
1,682 84 72
972
43 10
-3,240 646 71
9,790 322 -78
-907 94
-273 87 24
-431
36 34
-379 88 11
1urkey Azerbal[an Armenla
8ase meta|s and
arnc|es of base meta|
VEST
ORGIA
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SEVERAL HIGHLY ATTRACTIVE IMPORT
SUBSTITUTION OPPORTUNITIES
Constructon
- Building
materials
Constructon
- Finishing
elements
Food
processing
Packaging
SECTOR PRODUCT GROUP PRODUCTS
Artcles of cement and steel
Artcles of wood
Ceramic products
Glass & glassware
Furniture
Beverages and spirits
Preparatons of fruits and vegetables
Dairy and eggs
Meat
Plastc packaging
Paper packaging
Prefabs
Ready-mix concrete
Bricks
Finished artcles of steel
Plywood and laminated wood
Tiles
Sanitary ware
Windows
Glassware
Doors
Living furniture
Botling
Fruit juices
Jams
Vegetable oils
Milk
Cheese
Buter
Yogurt
Poultry/Beef/Pork/Lamb
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SEVERAL OPPORTUNITIES ARISING FROM GEORGIAS
TRANS-SHIPMENT FLOWS AND RESOURCES
OPPORTUNITY CURRENT ADVANTAGES TO BE LEVERAGED POTENTIAL FOR GEORGIA
ALUMINIUM
INDUSTRY
IRON AND STEEL
PRODUCTION
COPPER
POLYMERS &
OTHER PLASTICS
Large transshipment ows of raw
materials/input (Bauxite) and aluminium
cross Georgia to/from Tajikistan (largest
aluminium plant in Central Asia)
A lot of water recourses and large
hydropower plants in the pipeline
Georgia mines Manganese ore
Georgia produces ferro alloys, largely for
export (USD ~250 mn)
Large imports of iron and steel products to
Georgia (USD ~300 mn) and neighboring
countries
Georgia and Armenia export copper ores,
copper waste and scrap
Import overhang of copper products
(alloys and nal products e.g. wire, tubes,
pipes) amounts to USD ~200 mn in
the region
Import overhang of plastc products
amounts to 230 mn in Georgia and 8 bln in
the region
Georgia transships large ows of
petroleum products
Value chain integraton
- Producton of aluminium
- Producton of aluminium
products (fabricated or end
products)
Vertcal integraton of value chain
by adding producton of iron and
steel and related end products
Regional import substtuton
Producton of copper alloys
and end products (regional import
substtuton)
Plastcs and petrochemicals
producton (regional import
substtuton for plastcs/rubber)
VEST
ORGIA
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AGRICULTURE
OVERVIEW:
Over 21 micro-climates - a wide range of grain, vegetables, hard and
sof fruits, meat and dairy could be farmed
Agriculture accounts for 9% of GDP. It contributes ~53% of
employment mostly in subsistence farming (average farm size of 1.22 ha)
Traditonally Georgia has strengths in wine, nuts, fruits which account
for more than 60% of agriculture exports
The average gross monthly salary in the agricultural sector in Georgia
is USD 220
OPPORTUNITIES:
Import substtuton opportunites - meat, dairy products, onions,
potatoes etc
Export opportunites - traditonal strong sub-sectors, like wine,
walnuts, hazelnuts, sheep meat, etc
Productvity gain opportunites tomatoes, apples, cucumbers, stone
fruits, citrus etc
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14 POTENTIAL PRIORITIES CROPS/LIVESTOCK
TO FOCUS DEVELOPMENT EFFORTS
HIGH POTENTIAL PROJECTS GEORGIAS COMPETITIVENESS
IN
IN GEO
L
x
p
o
r
L
-
l
e
d

u
o
m
e
s
u
c

Nuts (culuvauon
and processlng)
1op 3 global exporLers of nuLs, ldeal growlng condluons, commlLmenL from lerrero
Grapes (culuvauon
and wlnemaklng)
ulsuncuve varleues and growlng condluons, Lradluonal sLrong lndusLry, access Lo ClS markeL,
large base of experlenced and low-cosL labor ln Lhe secLor
Lamb (husbandry
and meaL producuon)
Well-repuLed for lamb quallLy, slgnlcanL exporL poLenuals Lo Mlddle LasLern markeLs
C|trus (culuvauon
and [ulces)
ldeal growlng condluons, muluple lnvesLors already esLabllshlng frulL, processlng operauon, large
base of experlenced and low-cosL labor
8eef]da|ry (mllk and
caule meaL producuon)
8lg lmporL overhang, slzeable and fasL growlng domesuc demand, good naLural condluons for
rearlng
ork (meaL producuon)
lmporL overhang, slzeable and fasL growlng domesuc demand, good naLural condluons for rearlng
ou|try (chlcken meaL and
egg producuon)
8lg lmporL overhang, slzeable and fasL growlng domesuc demand, commerclal farms wlLh
lnLenslve operauons already ln place
C||ve o|| (culuvauon
and processlng)
Large demand for oll-relaLed producLs, good growlng condluon, access Lo ClS markeLs
Stone fru|ts (culuvauon
and [ulces)
ldeal growlng condluons, muluple lnvesLors already esLabllshlng frulL, processlng operauon, large
base of experlenced and low-cosL labor
1omato (culuvauon
and canned)
lmporL overhang, low lnvesLmenL needed ln greenhouse and lrrlgauon, qulcker Lo reallze quallLy
and yleld lmprovemenLs
1obacco (planLauon
and processlng)
Slzable demand for Lobacco and Lobacco-relaLed producLs, well-repuLed for Lobacco quallLy
Cucumber (culuvauon
and canned)
Low lnvesLmenL needed ln greenhouse and lrrlgauon, qulcker Lo reallze quallLy and yleld
lmprovemenLs
App|e (culuvauon
and canned)
ldeal growlng condluons, muluple lnvesLors already esLabllshlng frulL, processlng operauon, large
base of experlenced and low-cosL labor
Cn|on (culuvauon)
Low lnvesLmenL needed, qulcker Lo reallze quallLy and yleld lmprovemenLs
VEST
ORGIA
www.investngeorgia.org 25
REGIONAL COMPETITIVENESS AND POTENTIALS MAP
CROP POTENTIALS BY REGION
BASED ON REGIONAL SPECIALIZATION (NATURAL ENDOWMENTS,
CULTIVATION HISTORY), PRODUCTIVITY AND SEASONALITY
VEST
ORGIA
C O O S G O C O O S G O
IN
IN GEO
www.investngeorgia.org 26
IN
REGIONAL LOGISTICS CORRIDOR
TRANS-CAUCASIAN ROUTE
Latent gateway between Europe and Central Asia
Around 80% of port cargo and 60% of freight rail are transits
TRANSPORT INFRASTRUCTURE
Rapidly developing road infrastructure
Ports are cost-compettve vs. alternatve routes
FDI inows in the logistcs sector have primarily targeted
transport infrastructure
OPPORTUNITIES
Deep-sea port with PanaMax vessel
Containerizaton and logistcal centers
Direct connecton with European and Central Asian
railway networks
VEST
ORGIA
www.investngeorgia.org 27
GEORGIAS TRANSPORT INFRASTRUCTURE
MODE OF TRANSPORT
EXISTING INFRASTRUCTURE
AND FLOWS
UPGRADES
RAIL
1,500 km (90% electried)
~7,000 rolling stock, 180 locos
ROAD
1,500 km internatonal road
+ 20,000 km internal and local roads
POTI SEAPORT
13 berths, 8-10m depth
Container and bulk (210k TEU)
Owned/operated by Maersk/RAKIA
BATUMI SEAPORT
5 berths, 1 oshore mooring, 11m depth
90% petroleum/oil, 10% containers (44k
TEU)
Operated by JSC KazTransOil
KUHLEVI SEAPORT
Crude oil, petroleum, and lubricants
Owned/operated by State Oil Company
Azerbaijan
TBILISI INTERNATIONAL AIRPORT
~1 mn passengers (capacity: 3 mn)
Serving 28 destnatons
BATUMI INTERNATIONAL AIRPORT
100,000 passengers
RAIL
BTK connecton to Turkey
Modernizaton
Tbilisi bypass
~2500 new rolling stock
ROAD
East-West highway upgrade
POTI SEAPORT
New container berth (2014)
DEEP-SEA PORT
Min. 2 berth of 20m depth
(PanaMax)
First phase: Dry bulk (10m tons)
and containers (200k TEU)
USD 200 mn investment
volume
KUTAISI INTERNATIONAL
AIRPORT
Passenger, incl. low-cost
airlines
Currently under constructon
RGIA
R
o
a
d
/
R
a
i
l
M
a
r
i
t

m
e
A
i
r
IN
IN GEO
www.investngeorgia.org 28
CARGO TURNOVER
TRANSIT FLOWS THROUGH THE CORRIDOR
(MILLION TONS PER YEAR)
CENTRAL ASIA
Kazakhstan
Uzbekistan
Tajikistan
Kirgizstan
Turkmenistan
CAUCASUS:
Azerbaijan
Armenia
Europe+Turkey
Sender - 2.6
Destination - 4.1
Total - 6.7
Central Asia+Caucasus
Sender - 9.6
Destination - 4.7
Total - 14.3
APPROXIMATELY 80% ARE TRANSIT FLOWS
VEST
ORGIA
www.investngeorgia.org 29
ANNUAL CARGO FLOW OF CAUCASUS & CENTRAL ASIA
EXPORT
EU 15%
IMPORT
Other Regions 85%
EU 22%
Other Regions 78%
*Source : IGC TRACECA
Export Import Grand Total
TOTAL 255 ml. ton 68 ml. ton 323 ml. ton
EU 56 ml. ton 10 ml. ton 66 ml. ton
A
U 1
Other Regions 8
I t G dT t l
EU
Other Regions
IN
IN GEO
IN
O
Iron ore
2
uSu 4 bn
Cther
(bauxlLe, gold,
nlckel, CMs)
2|nc
3
uSu 1 bn
Copper
3
uSu 3 bn
C||
3
uSu 100 bn
Coa|
3
uSu 28 bn
Gas
14
uSu 9 bn
www.investngeorgia.org 30
GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED
REGION BOOSTING SIGNIFICANT RESOURCE RESERVES
FOR
COMPARISON:
REGION REPRESENTS
ONLY ~1.6% OF
GLOBAL
POPULATION
FOR FOR
COMPARISON: COMPARISON:
REGION REPRESENTS REGION REPRESENTS
ONLY ~1.6% OF ONLY ~1.6% OF
GLOBAL GLOBAL
POPULATION POPULATION
VEST
ORGIA
GEORGIA IS IN A HIGHLY STRATEGIC
LOCATION FOR TRANSSHIPMENT
www.investngeorgia.org 31
STRATEGIC LOCATION: IT SERVES AS AN ENTRY GATE TO THE CAUCASUS AND
CENTRAL ASIA AS WELL AS A STEPPING STONE TO THE REGION
LEVERAGING ITS LOCATION, GEORGIAS TRANSPORT ECONOMY CAN BENEFIT
FROM LARGE ADDRESSABLE TRANSIT FLOWS, GROWING ECONOMIES AND
LANDLOCKED RESOURCES
THE SHORTEST ROUTE BETWEEN EUROPE AND CAUCASUS/CENTRAL ASIA
GREAT POTENTIAL OF BETTER INTEGRATION AND DEVELOPMENT
OF THE REGION
IN
IN GEO
www.investngeorgia.org 32
REGIONAL SERVICES HUB
Georgias service sector achieves leading ranks
among regional economies in terms of value
added and trade
Services have major share of FDI inow of 45% in
2011 with USD 500 million:
OPPORTUNITY TO CAPITALIZE:
Financial services/headquarters
Retail hub as the destnaton-of-choice
for shopping
Financial services have grown at 19% p.a. since
2009 and is the leading service sub-sector for FDI
atracton with 15% of total inows in 2011
Consultancy services atracted 12% of total FDI
inows in 2011
Wholesale/retail trade accounts for 40% of
service GDP, and strong FDI inows rebound
at 48% p.a. since 2009
FDI inows in healthcare/social work have
grown at 146% p.a. since 2007
VEST
ORGIA
OPPORTUNITY TO POSITION GEORGIA AS
A REGIONAL RETAIL DESTINATION
GEORGIA - REGIONAL RETAIL HUB
Benets of destnaton mega mall
development
Complement overall tourism strategy with
solid retail value propositon
Retail magnet for foreign tourists and
a uent local with longer duraton of
visit (1/2 to 1 day), higher share of wallet,
and repeated visits
Presence of agship brands will drive retail
brand cluster growth
Tbilisi and Batumi as most potental locatons
Established tourist destnatons with 80%
of foreign tourist tra c in Georgia
Accessible with existng internatonal
airports and major transnatonal highway/
railway
Solid retail, hospitality and other
supportng services infrastructure
Integraton with other tourism oerings
e.g. sun & beach, casino
Easier to drive investments
ST
GIA
8otoml
1blllsl
www.investngeorgia.org 33
Vision is to develop mega malls in key locatons to transform Georgia - into the regional retail
hub leveraging high tra c of foreign tourists and strategic geography
BATUMI
TBILISI
IN
IN GEO
www.investngeorgia.org 34
GEORGIAN NATIONAL INVESTMENT AGENCY
State agency
- Promotng Georgia internatonally
- Supportng foreign investments and
investors before, during & afer
investment process
One-stop-shop for investors
Moderator between Investors,
Government and
Local Companies
Mission - Attracting Greenfield and M&A Investments
INVESTORS
GOVERNMENT
GNIA
LOCAL
COMPANIES
VEST
ORGIA
www.investngeorgia.org 35
INFORMATION
General data
Statstcs
Sector Researches
COMMUNICATION
Access to Government of Georgia at all levels
Local partners (Business Associatons, private companies)
ORGANIZATION OF SITE VISITS AND
ACCOMPANYING INVESTORS
AFTER CARE
Legal advising
Supportng services
WHAT YOU CAN GET FROM GNIA
INVEST
IN GEORGIA
GEORGIAN NATIONAL
INVESTMENT AGENCY
www.investingeorgia.org
E-mail: enquiry@investngeorgia.org