Foreign direct investment (FDI) in Georgia

FDI in Figures

According to UNCTAD's World Investment Report 2024, FDI flows to Georgia in 2023 decreased to USD 1.59 billion, down by 24% after the peak recorded one year earlier. At the end of the same period, the total stock of FDI was estimated at USD 24.35 billion, around 79.8% of the country’s GDP. Data from the National Statistics Office of Georgia show that Azerbaijan is the largest investor due to the ongoing construction of the Shah-Deniz pipeline (the country holds 20.2% of the total FDI stock in Georgia), followed by the United Kingdom (19.6%), the Netherlands (8.9%), Türkiye (5.7%), and the United States (4.6%). The EU as a whole accounts for 25.6% of the total stock; however, the country is increasingly opening up to Asian investment.  In terms of sectors, those attracting more FDI are financial and insurance activities (25.4%), transportation and storage (22.7%), real estate activities (8%), manufacturing (7.5%), and wholesale and retail trade (6.6%).  According to the same source, in 2024, FDI inflows reached USD 1.33 billion, with the UK as the main investor (USD 448.2 million), followed by Malta (USD 175.8 million), and the Netherlands (USD 151.7 million). The financial and insurance sector attracted the most FDI, with 39.5% of the total. Manufacturing followed (12.8%), ahead of real estate (11.6%), and energy (9.5%).

Overall, Georgia offers solid business and investment conditions, performing well compared to regional peers. To attract investors, the country offers many tax and legislative advantages. The Georgian economy has been almost fully liberalized and currently offers an attractive economic climate for investment. Georgia does not have specific mechanisms in place for FDI as governmental reviews of investment projects can be requested on an ad hoc basis. Furthermore, the national law guarantees the investors’ right to convert and repatriate income after payment of all due taxes. Business and investment conditions are sound and open-market policies are maintained along with low tax rates; however, there is an increasing lack of confidence in the judicial sector. Corruption, historically very present in the intermediate levels, has been largely eradicated – removing a major obstacle to attracting FDI. According to Transparency International, Georgia currently ranks 53rd out of 180 economies on the Corruption Perception Index 2024, as well as 57th among the 133 on the Global Innovation Index 2024 and 35th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Georgia

Strong Points

Georgia's competitive advantages in terms of attracting FDI include:
- Good resistance to the regional economic crisis (2014-2016);
- Agricultural, mineral, hydroelectric and tourism potential;
- International support, including from the EU and the IMF;
- Strategic geographical position (Caspian oil and gas crossing point);
- Democratic political system
- Business friendly environment (low corporate taxes, simplified registration procedures).

Weak Points

The country's main weaknesses in terms of attracting FDI include:
- Structural trade deficit, low diversification and export valuation;
- High poverty due to unemployment, underemployment and inadequate training;
- Low productivity of agriculture: half of assets, but less than 10% of value added;
- Insufficient transport infrastructure;
- Weaknesses of the education system and innovation policies;
- Relations with Russia weakened by the situation in Abkhazia and South Ossetia.

Government Measures to Motivate or Restrict FDI

According to the 2018 Doing Business Report of the World Bank, Georgia is ranking at the 9th place out of 190 economies in term of ease of doing business.

Since 2004, the Georgian government has established a range of measures in order to develop the country's economy:
- The privatization of public companies;
- The fight against corruption;
- Establishing a principle of non-discrimination between Georgian and foreign businessmen through the law "On promotion and Guarantees of Investment Activity" and "On State support on Investment";
- Drastically reducing the procedures for forming a company, which take on average two days;
- Reduction of corporate tax;
- Lifting of barrers for business operations;
- Liberalization of the labour market.

Bilateral investment conventions signed by Georgia

Georgia have signed bilateral conventions on FDI with 38 countries.