FDI (Foreign Direct Investment)
Foreign direct investment (FDI) is an essential source of capital for the Georgian economy, helping to create jobs, transfer technology, and boost economic growth. Georgia has become an appealing destination for foreign investors due to its strategic location, competitive business environment, and strong economic fundamentals.
Understanding Foreign Direct Investment
Foreign Direct Investment Georgia refers to the investment made by foreign entities in a country’s economy. This can be accomplished by establishing new enterprises, forming joint ventures, or acquiring existing businesses. Foreign direct investment (FDI) brings much-needed capital, technology, and knowledge into the country, thereby creating new jobs and supporting economic growth.
Foreign Direct Investment Georgia
One of the methods that the Georgian government has considered in order to create an attractive investment environment and help foreign investors who want to start their own business in Georgia is foreign direct investment. With low tax rates, reduced regulations and simplified bureaucracy, Georgia has been able to sign free trade agreements with a number of countries. This gives investors access to new markets.
According to the report provided by UNCTAD’s Global Investment, foreign direct investment in Georgia has doubled in 2021. This is double the $1.15 billion increase from the year-over-year level. Besides, Georgia receives investors in this field from several countries, including Azerbaijan, England, the Netherlands, Turkey and Cyprus.
Sectors Related to FDI in Georgia
So, Georgia has a varied economy with a variety of areas that appeal to foreign investment. Energy, tourism, agriculture, real estate, transportation, and logistics are the key sectors attracting FDI in Georgia.
Energy sector
Because of the country’s enormous natural resources, such as hydropower, oil, and gas, the energy sector, in particular, is a significant area of investment. In addition, the government has taken moves to liberalize the energy industry, making it more appealing to foreign investors.
Tourism sector
Georgia’s tourism industry has expanded quickly in recent years, with the country becoming an increasingly attractive destination for travelers from all over the world. The government has made steps to enhance the tourist industry, including infrastructural investment, promotion of the country’s cultural assets, and tax breaks for tourism-related firms.
Agriculture sector
Besides, Georgia’s agriculture industry is likewise an appealing target for FDI. The country boasts good soil, a suitable climate, and a lengthy agricultural history. The government has adopted measures to modernize and boost production in the agriculture sector, making it an appealing destination for international investors.
Real Estate sector
Moreover, Georgia’s real estate business has grown significantly in recent years, driven by high demand from both domestic and foreign buyers. The government has made steps to encourage the expansion of the real estate sector, such as simplifying the process of getting building licenses and lowering taxes on property transfers.
Transportation sector
Georgia’s transportation sector is well-developed, with numerous modes of transportation available, including air, sea, land, and rail. Tbilisi International Airport is the country’s primary airport. The Black Sea and the Caspian Sea are accessible via the country’s seaports, which include the Port of Poti and the Port of Batumi. Georgia also has an extensive road and railway network that connects it to neighboring nations and beyond.
Logistics sector
Finally, Georgia’s logistics industry has expanded quickly in recent years, thanks in part to the country’s advantageous location at the crossroads of Europe and Asia. Several reforms have been implemented in order to improve the business environment and attract foreign investment in this sector.
Investment Incentives for foreign investors
To entice international investors, the Georgian government provides a variety of investment incentives. Among these measures are:
- Simplifying and decreasing bureaucracy in the business registration procedure
- Tax breaks for investment in priority industries
- Improving transparency and decreasing corruption in government agencies
- Also, investing in infrastructure such as roads, trains, and airports
- Offering a variety of investment protection assurances, such as expropriation and currency convertibility.
Last word
As a result, foreign direct investment (FDI) is a type of investment that benefits both the investor and the host country. Because, doing foreign direct investment causes economic growth and job creation. This investment also helps in the visibility and expansion of the field in which it is applied. Of course, investing in any country can bring risks. But the Georgian government has reduced investment risks to a great extent by creating a suitable environment for business, placing different sectors for investment and providing various incentives.