Georgia attracted record levels of FDI in 2014, the highest inflows since 2008, according to data from Geostat, the country’s national statistics office. Last year, Georgia received an estimated $1.27bn in FDI compared with $941.9m the year before.
Eva Bochorishvili, economist at Galt & Taggart, the investment arm of Bank of Georgia, said that the peaceful transition of political power through elections, the signing of the Association Agreement with the EU and the Deep and Comprehensive Free Trade Area (DCFTA) are a few factors positively affecting investor sentiment during 2014.
The DCFTA will foster the incorporation of EU values and standards by Georgia, further attracting investments, said Ms Bochorishvili. “The Georgian government has continued to pursue business-friendly regulations and when regulatory changes were questioned by the private sector, constructive dialogue among stakeholders took place and the government demonstrated a readiness to take corrective measures.”
Data also revealed that transport, communications, construction and manufacturing are among the sectors attracting the majority of FDI in the country.
“While capital-intensive manufacturing attracted investments in brownfield projects, tourism and energy are attracting foreign investors in greenfield projects,” said Ms Bochorishvili.
Georgia offers competitive advantages such as low public debt, flexible labour legislation, low levels of taxation and simple tax administration. Other advantages include a stable energy supply, a floating exchange rate regime attesting to the soundness of the monetary policy framework, and a developed multimodal infrastructure for manufacturing, trade and logistics.
Ms Bochorishvili admitted Georgia lacks financial resources to realise its potential as a regional hub economy. “Therefore, the country needs FDI to modernise its economy and bring in new technologies, capital and know-how. FDI is seen as an important vehicle for fostering technological and human capital advancement, enhancing productivity and is an important source of sustainable funding for the current account deficit of Georgia.”