02 May 2018 – 0:00
By Irfan Bukhari I The Peninsula
Tbilisi: Terming investment climate in Georgia highly lucrative, Liza Tavdumadze (pictured), Head of Investment Promotion Department at Enterprise Georgia said that the government of Georgia had introduced a number of incentives for foreign investors.
“There exist a lot of opportunities to implement investment projects in various sectors like manufacturing, hospitality, real estate, energy, agriculture among others,” Tavdumadze said while talking to a group of Doha-based journalists including The Peninsula which visited Georgia on a tour organized by Georgian National Tourism Administration and Embassy of Georgia in Qatar.
She said that Georgia’s tourism industry was on a continuous rise as the number of international visitors increased from 6.3 million in 2016 to 7.6 million in 2017. To a question, Tavdumadze said that Foreign Direct Investment (FDI) amounted to $1.86bn in 2017 while Georgia had signed bilateral investment treaties with 33 countries.
Revenues from inbound tourism have been growing rapidly for the past five years. “Based on the preliminary data, revenues in 2017 rose by 27 percent year-on-year and amounted to $2.75bn. International visitor spending has also been growing steadily (+27 percent ) hitting 2.1 billion GEL in 2017.”
To another question, Head of Investment Promotion Department at Enterprise Georgia said that there were no real estate ownership restrictions in Georgia and it was fifth safest country in the world according to Numbeo’s Crime Index 2018.
Highlighting various investment incentives, she said: “The government of Georgia offers state owned land/building for free of charge for manufacturing projects. In order to get the land area for 1 GEL (Georgian currency) from government, investor should invest 6 times more than the market price of the property in capital Tbilisi and 4 times more than the market price in regions.”
For hotel infrastructure development, she said that the LEPL National Agency of State Property had selected 50 property owned by the State, which were located in touristic regions of Georgia including Tskaltubo, Kutaisi, Goderdzi etc.
She said that Georgia’s economic freedom score was 76.2 according to Heritage Foundation which was 16th freest among 170 countries in the world and 9th freest among 44 countries in the Europe region.
Ease of doing business score of Georgia is 82.04 according to the World Bank which stands at 9th position among 190 countries in the world and 1st among the countries in Europe and Central Asia.
Liza said that there were special incentives for the development of high mountainous regions, “According to the Law on the Development of High Mountainous Regions, companies, which have a status of high mountainous settlement enterprise, are exempt from profit, property and personal income taxes.”
She said that Georgia was strategically located with an access to 2.3 billion market without customs duty. Georgia has Deep and Comprehensive Free Trade Area (DCFTA) with EU; Free Trade Agreements (FTA) with EFTA Countries (Iceland, Norway, Switzerland, and Liechtenstein), Turkey and CIS countries (Russia, Ukraine, Kazakhstan etc.); Free Trade Agreement with the People’s Republic of China; GSP agreement with USA, Canada, Japan. Georgia is a member of WTO while negotiations on Free Trade Agreement (FTA) with Hong Kong has been concluded recently.
Liza said that “Enterprise Georgia” was engaged in supporting and promoting production in Georgia by organizing participation of companies in the international trade fairs. “Enterprise Georgia provides financial support of 75 percent international trade fairs.”
There is also support with financial resources from the government of Georgia for investors. Under the “Produce in Georgia” Program, if company receives loan from the local bank in GEL, government can co-finance 10% of interest for the first 24 months. In the same manner, there is facility of interest rate co-financing for hotels (without international Franchise/Management agreements) under which government can co-finance 10 percent of interest rate for the first 24 months for hotels. Liza said that Georgia had young, skilled and competitively priced labour force.
She said that investment residence permit is issued to a foreign citizen who invested at least 300, 000 GEL in business activities in Georgia. “Film in Georgia” is a newly launched film industry incentive program offering a 20 percent cash rebate on qualified expenses incurred in Georgia.
The programme aims to support the development of Georgia’s film industry. An additional 2-5 percent rebate is available if projects include elements designed to promote Georgia as a destination.
Another lucrative attraction for investors in Georgia is “Partnership Fund” through which potential investors are able to cooperate with the state-owned investment fund which provides equity financing to financially viable projects in order to decrease country risks for foreign investors and acts as a “sleeping Partner” with a predetermined, clear exit strategy. Georgia also has four Free Industrial Zones (FIZs) which are operating in Poti, Kutaisi and Tbilisi.