Investment opportunities in Georgia

Heidi Eterovic, UNDP GeorgiaSophia Kenchoshvili, Georgian National Investment Agency

Country overview:

Population: 4.6 mln

Capital: Tbilisi

Area: 69,700 sq km (26,911 sq miles)

Life expectancy: 69 years (men), 77 years (women) (UN)

Monetary unit: Georgian Lari (GEL)

GEL/US$: 1.6500, GEL/EUR: 2.1264

2008 GDP: US$ 12.8 bn

2008 GDP per capita(PPP): US$ 4,851

Real GDP Growth: 2% in 2008, 12.4% in 2007, 9.4% in 2006 and 9.6% in 2005

Inflation rate (e-o-p): 5.5%

Source: CIA Fact book, Dep. of Statistics

Why Georgia?

FDI and export promotion #1 priorities of the government

Favorable conditions for business: # 19 by Ease of Doing Business

Strategic location, and liberal trade regimes

Growing ties to the EU

Opportunities in investment and sourcing.

Investment sectors:

Energy sector: government support to renewables

Agriculture sector: organic production, processing

Agriculture sector: sourcing, water, wine

Education, technical consulting and services

State Program: Renewable Energy 2008• List of 87 sites, capacity ranging from 5 mw- 60 mw• Investors interested are required to submit a standard application form• Will be available for other investors for 30 day period• Bank guarantee in the amount of US 170, 000 per mw of prospective capacity.• The land will purchased at a nominal price• Electricity generated can be sold either domestically or abroad.

Export Markets:•The Georgian power grid is connected to the grids of all neighboring countries and can work in synchrony with Russia and Azerbaijan •Once the HVTL Armenia-Georgia line becomes operational, Georgia will have the ability

to export electricity not only to Armenia, but also to Iran•Prior to that, Turkey and, to a lesser extent, Azerbaijan and Russia, are the most attractive markets for electricity exports •Turkey is the most attractive market to export electricity with the existing 220kV transmission line and DC link – no synchronisation required. Furthermore, once the construction of the 400-500kV transmission line is completed (due tentatively in 2011)

capacity for export will increase drastically

Agriculture sector: 100 new enterprises in rural areas

State will undertake obligation to develop road and amelioration infrastructure On preliminary stage collection of 100 lots of land an competitive selection of investors will be launchedAt the same time upon specific request of investor selection of land necessary for creation of such enterprise will take placeSize of land lot exceeds or matches 200 ha and lot could consist of different partials

Criteria for selection: Payment of maximal price for land partial The best investment conditions among the candidates

Conditions for the winners:Payment of maximal price and implementation of investment project In standard case enterprise shall be created during 1 year Investor pays 20 % of Price In the investor meets all the contractual demands, rest 80% shall not be paid

Poti Free Industrial Zone: The first industrial zone in the Caucassus region

Location: adjacent to the Poti Sea Port – largest port on the Black Sea Total Free Zone Area: 300 ha with water frontage of Rioni River and Black Sea on two sides Logistics: well connected to the highways, railroads and international Tbilisi and Batumi AirportsKey investment sectors:

ManufacturingSmall/medium enterprisesWarehouse and container storageTransport and logistics High tech industryRaw material industryStorage and tradeMaintenance and Reconditioning

Advantages of the FIZ in Poti:

Competitive rates of lease of land, warehouse and container storage areas100% ownership of companies operating in PFIZNo foreign exchange controls100% exception from profit tax100% capital and profit repatriation No restriction on hiring expatriatesExempt of VAT payment on import and export of goodsNo trade barriers of quotasLow cost of energy

Contacts:

Sophia Kenchoshvili: skenchoshvili@investingeorgia.orgHeidi Eterovic: heidi.eterovic@undp.org

www.investingeorgia.orgwww.undp.gewww.agro100.gewww.minenergy.gov.gewww.economy.gewww.investmentguide.ge

Thank You!