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Investments Year in Review

‘’According to the data of three quarters of 2017, direct foreign investments in Georgia amounted to 1.4 billion USD, which is quite positive, considering the existing investment environment and trends in the region.

It is important that growth is stable compared to previous periods and maintaining this trend is absolutely realistic for the FDI of 2017 to make up to 1,9 billion US dollars,’’- economic expert Levan Kalandadze assessed 2017 year in investments:

In which regions were investments allocated most intensively?

Given the fact that economic activity in Georgia is still asymmetric, regions are still less active in this regard and on the other hand, major investment sectors (transport, communications, and construction) are mainly concentrated in large urban centers, investment map and investor activity respectively is allocated in Tbilisi and several urban centers. However, the development of energy, transport logistics and tourism infrastructure creates the prospect of investment activity in the regions, especially in the Black Sea region of Samegrelo, region of Western Georgia.

Are there any changes in FDI source geographically?

The geographical area of direct foreign investment sources is practically unchanged in recent years. The main investors are Azerbaijan and Turkey. Their total share is almost 60% of total investments made in Georgia (Azerbaijan 25,9% and Turkey 23.3%). This reference is based on the natural proximity of these countries and, on the other hand, the long-term traditions of business relationships between business circles and presumably this tendency will be maintained in the nearest future. However, it should also be taken into consideration that the share of the United Kingdom and the Netherlands in traditional foreign investments is traditionally maintained third-fourth positions (10,7% and 10,4% respectively).

What are your predictions for the next year?

Future expectations and projections are again linked to the infrastructure projects of the government’s four-point plan, which provides major investments in the construction of roads and highways in 2018-2020. On the other hand, Anaklia development consortium (Anaklia Port and Anaklia City) is a few billion-dollar project for 2018-2021. And third, in terms of investment, energy, communications, construction and transport directions will be topical, especially in the conditions of free trade regime with China.

Taking into consideration this agenda, it is quite realistic that the volume of direct foreign investments in Georgia can be significantly increased (about 20% increase) by 2018-2020.

Economic expert Merab Janiashvili names top foreign investments by countries – Azerbaijan is on the top of the list of the largest direct investor countries in the third quarter of 2017. In the 9 months of this year, our neighbors invested USD 378 million in Georgia. Azerbaijan accounts for 25.9 percent of the investments, second place – Turkey with 23.3 percent, and the United Kingdom – 10.7 percent.

The inflow of foreign investment by countries is as follows:

  • Azerbaijan – 154 million USD
  • Turkey – 138.6 million USD
  • Great Britain – 63.4 million USD
  • Netherlands – 61.9 million USD
  • The US – 23.4 million USD
  • Czech Republic 23 million USD
  • China 18.4 million USD
  • Russia – 15.2 million USD
  • Korea – 15.2 million USD

Merab Janiashvili:

The volume of direct foreign investments made in Georgia in the three quarters of 2017 totaled 1 346.5 million US dollars, amounted to 2.9 percent more than the corresponding period of the previous year. Over the last 7 years, the amount of investment in Georgia exceeds USD 1 billion, but as usual, these funds flow into non-manufacturing sector such as “transport and communications” and financial sector. As a result, large part of population doesn’t receive any benefit from investments.

The most invested fields:

  • Transport – 177.8 million USD
  • Communications – 116.2 million USD
  • Construction – 72.3 million USD

Investments by regions: As usual, ¾ of investments in Georgia comes to Tbilisi. During the last 8 years, the total FDI (9,4 billion US dollars) in Georgia – 73.6% is allocated in Tbilisi, 6,9 billion USD. That is, the whole FDI ¾ is made in the capital of Georgia. Ajara and Samegrelo-Zemo Svaneti takes second and third places in 2009-2016 of the volume of foreign investments. Accordingly, by 875 million  (9% of the entire FDI) and 500 million  (5%) USD. Consequently, 12% of foreign direct investments comes to remaining regions.

According to Geostat, TOP-10 of Georgia’s largest investor companies in the third quarter is:

  • IDS Borjomi,
  • Energo-Pro Georgia
  • Magticom
  • BP Group
  • Ajar Energy 2007 LTD
  • China Railway
  • Metro Avrasya Georgia JSC
  • ENKA İnsaat ve Sanayi
  • Georgian Tourism Development Foundation LTD
  • Nenskra Hydro.