The Government of Georgia is taking active measures to attract foreign investments in promising business areas. This is done in order to accelerate economic growth, increase exports, and reduce vulnerability to external factors. That is why Georgia is now known not only as of the most popular tourist destination but also as a country for profitable investments. Why investors choose Georgia will be explained in more detail in this article.
According to the National Statistics Service of Georgia “Sakstat” in 2019 the volume of direct foreign investments in Georgia has increased significantly compared to previous years and according to preliminary estimates amounted to 1.3 billion USD.
Such countries as Great Britain, Turkey, and Ireland invested the most – 48.7% of the total amount. Popular sectors for investment are the financial sector, energy, restaurant, and hotel business.
The main advantages of investing in Georgia
A weighty argument to prove that it is worthwhile to make profitable investments in Georgia is, first of all, a practical geoposition of the state that allows us to take a convenient strategic position. Oil transportation routes leading Caucasian oil to Europe pass through the country. Georgia has direct access to the sea, namely, a developed system of sea routes, which allows easy export and import. The country has a well-thought-out system of railways and highways.
But in addition to geographic factors, investors and analysts pay attention to the list of other positive characteristics of the state, which allow to safely call it profitable for investments:
- a small rate of corporate tax;
- simplicity and accessibility of registration of foreign companies in the state;
- the system of preferential taxation in free economic zones and the possibility of creating a company in a virtual zone;
- the trust of the world economic community in Georgia;
- the government of the state promptly develops new mechanisms to simplify the procedure for introducing foreign deposits in the country, which attracts investors.
In order to attract investors who want to invest in the economy of Georgia, the governing side of the state has developed a large number of legislative and tax incentives. That’s why investors are choosing Georgia.
A number of measures have been taken in the country now, the main goal of which is to stimulate the growth of direct foreign investments in the economy of the country for its progress:
- the possibility of privatization of state enterprises;
- successful fight against corruption in the country;
- equal rights for residents and non-residents in the sphere of entrepreneurship;
- simplification of bureaucratic procedures in the country;
- constant work on reducing tax rates;
- simplification of labour legislation.
What are the risks for investors?
Certainly, the Georgian system of economy has a number of drawbacks and risks, which can cause failures on the business market in this country:
- imposed limits and restrictions on the domestic market;
- unstable relations with neighboring states;
- low level of regional development.
All this can have a negative impact on the intentions of entrepreneurs to invest in business in Georgia. Inadequacy of the domestic market leads to problematic imports of goods in the state, so it is more profitable to choose the strategy of exporting manufactured products. This does not apply to travel agencies and hotel companies, as Georgia is the leading state at this level and of course, this sphere brings good profit.
Sufficiently unstable relations with the Russian Federation and the military conflict in South Ossetia and Abkhazia also have a negative impact on the economic situation in the state. This issue has been raised several times recently, so now experts believe that the fears may be minimal, as the situation has normalized.
Georgia, like other post-Soviet countries, has largely felt the impact of corruption movements. Georgia has the lowest corruption rate in the region. At the same time, compared to last year, the country scored two points less (56) and its rating dropped by three points (from 41 to 44). This is an important step towards attracting investors.
If you have been looking for a suitable country to invest or start a long-term business, Georgia is an excellent option with great potential in the future. Our experts can answer all your questions regarding any topic related to business in Georgia. Leave an application and get a free consultation.