Investment News

Investor.ge provides a brief update on investments and changes in government policy that could impact the business environment. Information in this issue was taken from agenda.ge and other sources.

Rothschild & Co to draft strategy ‘for Georgia to become regional financial hub’
Rothschild & Co, one of the largest independent financial service groups, will develop a strategy for Georgia to facilitate its transformation into a regional financial hub. An agreement supporting this decision was signed between the Managing Partner of Rothschild & Co Arielle Malard de Rothschild and the government of Georgia represented by its Prime Minister Irakli Garibashvili on December 16, 2021 in Brussels. PM Garibashvili tweeted at the time that becoming a regional multi-functional hub linking Europe and Asia will bring prosperity to the Georgian people. Rothschild & Co will also work to attract more investments and grants for Georgia, PM said.

Financial sector leads FDIs in Q3 2021
Foreign direct investments (FDI) in Georgia amounted to USD 299 million in the third quarter of 2021, increasing 1.4% compared to the same period last year, GeoStat data show.
The three sectors with the largest share of FDIs for the reporting period include the financial sector with 87.1 million USD (29.1%) in investments, the energy sector with 69.3 million USD (23.3%), and the manufacturing sector with 54.8 million USD (18.3%) in direct investments. The top three countries with the largest amount of investments for the same period were the United Kingdom with 60.9 million USD (20.4%), the Netherlands with 59.8 million USD (20%), and the Czech Republic which invested 36 million USD (12%) during the third quarter of 2021.

Updates from Georgian agriculture
Tangerine exports were up 34% in the last four months, reaching 31,900 tonnes, bringing in USD 15.7 million of revenue. The largest importers of Georgian tangerines are Russia with 22,267 tonnes, Armenia with 5,254 tonnes, and Ukraine with 3,138 tonnes.
Georgian hazelnuts are also on the up, with a 28% y/y increase in exports between August 1, 2021 and January 23, 2022, the Georgian Ministry of Agriculture and Environmental Protection reports. Revenue generated from export equaled USD 84.5 million, which is USD 8.3 million higher than last year. The export price for hazelnuts has grown by 11% for the same period.
The largest importers of Georgian hazelnuts are Armenia, China, Russia, Ukraine, Italy, Germany, Spain, Czechia, Poland, France and Lithuania.

EIB invests €34 million in rural internet penetration in Georgia
The European Investment Bank (EIB) has pledged to invest €34 million to provide open access internet infrastructure for approximately 500,000 people residing in rural and remote areas of Georgia. Georgia will receive finances from the EIB to install approximately 5,000 km of optic fibre cables. This investment will ensure improvement of life and create new business opportunities, the bank representatives said.
Georgia, UAE sign agreement on starting free trade agreement negotiations
The United Arab Emirates may be the next country with which Georgia concludes a free trade agreement.
An MoU to begin negotiations was signed on December 29, 2021, the Ministry of Economy of Georgia stated. The ministry expects negotiations will conclude by the end of the year. Turnover between the two countries has been increasing in the past year despite the pandemic. Exported products include agricultural produce, fruits, vegetables, meat products, mineral water among others.

Georgia’s net international investment position at negative $25.6 billion
The net international investment position (IIP) of Georgia, which measures the difference between external financial assets and the liabilities of a country, amounted to negative USD 25.6 billion as of September 30, 2021, the National Bank of Georgia states. Net IIP decreased by USD 319.8 million compared to the previous quarter. International assets equaled USD 11.1 billion as of September 30, 2021, showing a USD 150.3 million increase quarterly. Liabilities increased by USD 470.1 million in the reporting period, amounting to 36.7 billion USD.

International Finance Hubs Planned in Tbilisi, Gonio
The Georgian government is planning to create international finance hubs in the capital city of Tbilisi and a coastline town of Gonio at the Black Sea, Minister of Economy of Georgia Natia Turnava reported.
These hubs will facilitate international companies to register in Georgia and relocate their activities to the mentioned zones. While the government expects the launching and development of such financial hubs to bring in foreign direct investments to the country, they are also aimed at active development of the regions in which they are launched, as well as create additional jobs.
Prime Minister Irakli Garibashvili named “establishing the country as a regional financial centre” as one of the advantages of such international finance hubs. A total area of 110 hectares will be allocated near the Tbilisi Sea area and on the territory of Gonio for the development of infrastructure for the said financial centers.

Georgia wine exports set record high in last 9 years
The total export of Georgian wine amounted to about 107 million bottles to 62 countries in 2021. This number sets a record high in the last nine years of Georgian wine export. Foreign sales generated USD 250 million. A total of 441 companies exported their wine in 2021. The same indicator only showed 100 companies in 2012. Wine export has increased by 360% compared to 2012, Prime Minister Irakli Garibashvili stated. The total export of alcoholic beverages generated USD 400 million in 2021, which is 18% higher compared to 2020. Besides wine, classic brandy, Georgian chacha are being exported among others.

Stadler Rail Technology considering opening factory in Georgia
Plans to open a Stadler Rail factory in Georgia were discussed at a meeting between the Prime Minister of Georgia Irakli Garibashvili and Stadler Chairman of the Board of Directors Peter Spuhler.
Stadler, a Swiss-based internationally recognized rail technology company that produces railway rolling stock, is considering the possibility of opening a factory to manufacture railway components locally in Georgia as well as offer repair service. The favourable business environment and ongoing and planned reforms in the country were also discussed at the meeting, the Georgian PM’s office says.

More economic figures
Incoming money transfers in December 2021 equaled USD 229.5 million, making for a 14.9% increase compared to December 2020. Largest senders are Russia (39.70 million USD), Italy (37.88 million USD), and the United States (26.65 million USD).
The annual inflation rate for 2021 is at 13.9%, mainly influenced by the following price changes: food and non-alcoholic beverages (+15.6%), transport (+17.3), housing, water, electricity, gas and other fuels (+43.5%).
Gross external debt for the third quarter of 2021 increased by USD 130.9 million compared to Q3 2020, and as of September 30, 2021 amounts to USD 21.0 billion, equaling 120% of the annual GDP. At the same time, nominal GDP equaled GEL 15.99 billion while real GDP increased by 9.1%, preliminary data from the National Statistics Office of Georgia show.

Domestic exports up nearly 27%
Georgia’s top trading partners in 2021 by external turnover remained Turkey (2.1 billion USD), Russia (1.6 billion USD), and China (1.4 billion USD), preliminary data from the National Statistics Office of Georgia show. The country’s top trading partners by import for the same period are Turkey (1.8 billion USD), Russia (1 billion USD), and China (864.8 million USD), while the countries that became top trading partners by export are China (615.6 million USD), Russia (610 million USD), and Azerbaijan (531.7 million USD). Locally produced Georgian goods worth USD 4.2 billion were exported in 2021, showing a 26.9% growth compared to last year.

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