Georgia flag Georgia: Investing in Georgia

Foreign direct investment (FDI) in Georgia

FDI in Figures

According to UNCTAD's World Investment Report 2021, FDI flows to Georgia in 2020 decreased to USD 617 million, more than halved compared to 2019, following the global economic crisis triggered by the Covid-19 pandemic. At the same time, the total stock of FDI was estimated at USD 18.6 billion. FDI is largely supported by natural resources. More than 30% of inflows are related to extractive industries. Trade and finance attract 20% and 11% of FDI inflows respectively. Georgia attracts investments from several countries. Azerbaijan is the largest investor due to the ongoing construction of the Shah-Deniz pipeline. The majority of FDI flows generally come from the UK, Russia, Turkey, the Czech Republic and the United Arab Emirates (National Statistics of Georgia, 2021). However, the country is increasingly opening up to Asian investment. According to provisional data from the National Statistics Office of Georgia, in 2021 FDI inflows reached USD 728.4 million, compared to USD 1.3 billion recorded before the pandemic.

UNCTAD estimates that FDI flows into Georgia will grow moderately in the coming years, supported by rising commodity prices and stronger economic growth. To attract investors, the country offers many tax and legislative advantages. The Georgian economy has been almost fully liberalised and currently offers an attractive economic climate for investment. Overall, business and investment conditions are sound; however, there is an increasing lack of confidence in the judicial sector. Corruption, historically very present in the intermediate levels, has been largely eradicated - a major obstacle to attracting FDI. According to Transparency International, Georgia currently ranks 45th on the 2021 Corruption Perception Index. Georgia is the 7th easiest place to do business in the world according to the World Bank's latest Doing Business Report, one spot down compared to the previous edition. After providing cheaper electricity, strengthening the protection of minority investors and improving the resolution of insolvency problems, the country facilitated the creation of business, the payment of taxes and the execution of contracts.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 1,3365721,153
FDI Stock (million USD) 19,32518,56719,380
Number of Greenfield Investments* 19138
Value of Greenfield Investments (million USD) 1,380257295

Source: UNCTAD, Latest available data

Note: * Greenfield 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.

 
Country Comparison For the Protection of Investors Georgia Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 9.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 9.0 6.8 9.0 5.0

Source: Doing Business, Latest 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.

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What to consider if you invest in Georgia

Strong Points
Georgia's competitive advantages in terms of attracting FDI include:
- Good resistance to the regional economic crisis (2014-2016);
- Agricultural, mineral, hydroelectric and tourism potential;
- International support, including from the EU and the IMF;
- Strategic geographical position (Caspian oil and gas crossing point);
- Democratic political system
- Business friendly environment (low corporate taxes, simplified registration procedures).
Weak Points
The country's main weaknesses in terms of attracting FDI include:
- Structural trade deficit, low diversification and export valuation;
- High poverty due to unemployment, underemployment and inadequate training;
- Low productivity of agriculture: half of assets, but less than 10% of value added;
- Insufficient transport infrastructure;
- Weaknesses of the education system and innovation policies;
- Relations with Russia weakened by the situation in Abkhazia and South Ossetia.
Government Measures to Motivate or Restrict FDI
According to the 2018 Doing Business Report of the World Bank, Georgia is ranking at the 9th place out of 190 economies in term of ease of doing business.

Since 2004, 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 through the law "On promotion and Guarantees of Investment Activity" and "On State support on Investment";
- Drastically reducing the procedures for forming a company, which take on average two days;
- Reduction of corporate tax;
- Lifting of barrers for business operations;
- Liberalization of the labour market.

Bilateral investment conventions signed by Georgia
Georgia have signed bilateral conventions on FDI with 38 countries.

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Latest Update: November 2022

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