Transcript doing business with why?

DOING BUSINESS WITH
WHY? WHERE? HOW?
GEORGIA: COUNTRY OVERVIEW
▪ Area: 69,700 km2
▪ Population: 3,7 mln
▪ Budget deficit: 3,2% of
GDP
▪ Inflation rate: 4%
▪ Capital: Tbilisi (1,1 mln
population)
▪ Total Public Debt to
Nominal GDP: 41,5%
▪ GDP: 13,9 bln USD
▪ Unemployment: 12,4%
▪ GDP per capita: 3743
USD
▪ Foreign Direct
Investment: 1,35 bln
USD
▪ Budget revenue: 8,5 bln
GEL
▪ Foreign Trade: 9,9 bln
USD
GDP STRUCTURE 2015
FDI STRUCTURE 2015
* EU – 37%
BILATERAL TRADE BETWEEN
GEORGIA AND LATVIA
Year
TRADE (mln USD)
EXPORT (mln USD)
IMPORT (mln USD)
2014
28,4
8
20,4
2015
26,2
6,3
19,9
2016 (I-III Q)
25,2
4,1
20,1
# Trade Partner
Most popular export product
Georgia
# 56 (for Latvia)
Wine - 36,6% of all export
(Ge
Latvia
# 40 (for Georgia) Medicine - 18,8% of all export
INVESTMENT FROM LATVIA
2014
2015
8,1 mln USD
7,1 mln USD
Financial sector – 44,5%
Real estate – 65,7%
Other sectors (education, social and personal,
utility) – 35,3%
Financial sector – 24,1%
Agriculture, fishing - 17,3%
Transports and Communications – 3,4%
Transports and Communications – 1,3%
Construction – 2,5%
Construction – 1,2%
Agriculture, fishing – 2,4%
During first 2 Q of 2016 the investment was 5,5 mln USD
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.
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
WHY?
» DOING BUSINESS IS EASY – SIMPLE TO
OPEN AND OPERATE
Indicator/
DB 2017
Time, days
Number of
Procedures
Doing business
2016, Rank
Starting Business
1
2
8
Registering Property
1
1
3
Dealing with
Construction Permits
48
7
8
WHY?
» EFFICIENT, PRO-BUSINESS AND
CORRUPTION-FREE GOVERNMENT
Ease of Doing
Business (2017, WB)
Index of Economic
Freedom (2016, HF)
WHY?
» EFFICIENT, PRO-BUSINESS AND
CORRUPTION-FREE GOVERNMENT
Global Corruption Barometer
Percentage of users
paying a bribe to tax
authorities in the
past year
Percentage of users
paying a bribe in
registry and permit
services
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
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
WHY?
» TAXATION – LOW, SIMPLE, FAIR
Taxes
Total number
Before
Current
21
6
12-20%
20%
Social Tax
33%
-
Corporate Profit Tax
20%
15%
Value Added Tax
20%
18%
Personal Income Tax
Excise Tax
Property Tax
Customs/Import Tax
Depending on type of goods
Up to 1%
0%, 5% or 12%
▪ 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
WHY?
» STABLE FINANCE AND BANKING
SECTOR
BB- Stable
BB- Stable
14 international banks
6 local banks
Ba3 Positive
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
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
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.
DOING BUSINESS WITH GEORGIA
» WHERE?
• Energy sector
• Hospitality and Real Estate
• Manufacturing
• Agriculture
• Regional Logistics and Services Hub
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)
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)
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)
WHERE?
» HOSPITALITY AND REAL ESTATE
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
WHERE?
» MANUFACTURING
▪ 11% of GDP
▪ 5% of employment with average salary of 410 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
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
WINE MAKING – GAUMARJOS!
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.
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%
HOW?
» ACCESS TO FINANCE AND INCENTIVES
& CONSULTING
Valuable Partner Companies
PARTNERSHIP FUND
www.fund.ge
GEORGIAN ENERGY
DEVELOPMENT FUND
gedf.com.ge
PRODUCE IN GEORGIA
qartuli.ge
AGRICULTURE PROJECTS
MANAGEMENT AGENCY
apma.ge
GEORGIAN CO-INVESTMENT
FUND
GEORGIAN NATIONAL
INVESTMENT AGENCY
www.gcfund.ge
www.investingeorgia.org
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
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
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
ADDRESS: RAINA BULVARIS 3, RIGA
TEL: 67-213136
EMAIL: [email protected]
WWW.LATVIA.MFA.GOV.GE
FACEBOOK: EMBASSY OF GEORGIA
TO LATVIA