The economic development in the modern world is particularly related to the stability of the situation followed, as a rule, by inflow of investments. In this aspect Georgia possesses big potential for development of economic sectors. Association agreement signed between Georgia and EU in 2014 fully meets the social-economic visions of the government, process of Georgia’s integration into Europe and inflow of direct foreign investments.
“A qualitatively new phase, new stage commenced for Georgia after signing of the Association Agreement with the EU. It is an important stage and we are perfectly conscious of it. It requires our 24-hour work so that we are ready to face all challenges”, Prime Minister of Georgia Irakli Garibashvili says. According to him, building of strong and effective democratic institutions is a permanent priority for the government.
According to the Premier, the development of institutions based on liberally-democratic values is ongoing in Georgia. The process of ensuring of rights gained an irreversible character. The rights of absolutely all citizens are protected. The work on security and strengthening of regional positions of the country is ongoing.
“Fulfillment of obligations on the Association Agreement with the EU is one of the major directions of the internal policy of the government. Fulfillment of this agreement will touch on the whole spectrum of social and economic life of the country. The agreement fully coincides with social-economic vision of the government. Economic policy of the government is based on principles and values of free market economy”, the head of the Georgian government says.
Energy assets
Georgia is developing generating capacities. In 2014 Paravan hydro power plant (HPP) with a capacity of 87 MW was commissioned in Samthe-Javahetia.
“Nowadays we are about to open another extremely important facility in Samthe-Javahetia. This project was successfully implemented jointly with our Turkish partners. Paravan HPP is a step forward aimed at strengthening the economy of Georgia. Paravan HPP is another example of close cooperation between Georgia and Turkey”, Prime Minister Irakli Garibashvili said in his speech. According to Irakli Garibashvili, “energy is a sphere which development is directly associated with the economic growth of the country”.
“Development of the energy sector will help us to put our economy on its legs. It involves creation of new working places in the region. I would like to note that such a powerful hydropower plant was built in our country for the first time over the past 35 years. Over $200 mln was spent on the construction of the plant, which is indeed a big investment made by our Turkish partners. Paravan HPP will increase electricity generation by 410 mln kWh. It will indeed become a progress for the energy sector of Georgia”, Irakli Garibashvili says.
Investments in figures
In IIQ 2014 direct foreign investments in Georgia amounted to $151 million, the National Statistics Office of Georgia (GeoStat) reports.
The summary preliminary data for the first six months of 2014 made $416 million. In IIQ 2014 the most part of investments, $101 million, was allocated to the transport and communications spheres, which is $57 million up vs. IQ 2014 and $73 million up vs. IIQ 2013. Transport and communication account for 67% of total direct foreign investments into the economy of Georgia in IIQ 2014.
For the first six months of 2014 direct foreign investments into the transport and communications sectors amounted $145 million, which is $81 million up vs. the similar period of 2013.
The refining industry accounts for 38.4% of total direct foreign investments into the Georgian economy for April-June 2014. This is $58 million, which is $12 million up vs. IQ 2014 and $30 million up vs. IIQ 2013.
For the first half of the year 2014 investments into the refining industry of Georgia made $104 million, which is 136% up vs. the similar indicator of 2013 ($44 million).
In IIQ 2014 direct foreign investments into the energy industry made $45 million, which is $33 million up vs. IQ 2014 and $26 million up vs. IIQ of the last year. In April-June 2014 the energy sector accounted for 30% of the total amount of direct foreign investments in the economy of Georgia.
For the first half of the year 2014 direct foreign investments to the energy sector made $57 million, which is $66 million down vs. the similar period of 2013.
In April-June 2014 direct foreign investments in the construction sector made $21 million, which is $15 million up vs. IQ 2014 and $28 million down vs. IIQ 2013.
The construction sector accounts for 14% of the total amount of direct foreign investments into the economy of Georgia in IIQ 2014.
During the first six months of 2014 direct foreign investments in the construction sector amounted $27 million, which is $27 million down vs. the similar period of 2013 ($54 million).
In IIQ 2014 direct foreign investments in the real estate sector made $41 million, $11 million into the mining industry, $5 million into agriculture and $127 million into the financial sectors.
In term of investments into the economy of Georgia in IIQ 2014, Netherlands take the lead with $93 million, which makes 62% of the total amount of direct foreign investments. It is followed by Azerbaijan with $77 million (51%) and Luxemburg with $48 million (32%).
According to the volume of investments made into the economy of Georgia within the first 6 months of 2014, the Netherlands ($174 mln), Azerbaijan ($99.9 ml) and Luxemburg ($59 mln) share the first three positions respectively.
According to the updated data, the volumes of foreign direct investments made in Georgia through 2013 totaled $942 mln, which is 3.3% higher than the specified data of 2012.
The volume of direct foreign investments made in Georgia in 2012, 2011, 2010, 2009, 2008, 2007 and 2006 totaled $912 mln, $1.117bln, $553.1 mln, $658.4 mln, $1.5 bln, $2.01 bln and $1.2 bln respectively.
The volume of investments made into the economy of Georgia by Azerbaijan in 2013 totaled $95mln, National Statistics Office of Georgia reports. Total volume of direct foreign investments made into economy of Georgia through 2013 totaled $914 mln.
The Netherlands is the first in terms of the volume of investments made into the economy of Georgia through 2013. Luxemburg ($145 mln), China ($98 mln) and Azerbaijan ($95 mln) vs $59 mln of 2012), which accounts for 10% of total investments made into the economy of Georgia, share the second, third and fourth positions respectively. It is noteworthy that Azerbaijan is the first in terms of the volume of investments ($72 mln) made into the economy of Georgia in the fourth quarter of 2013.
According to the data of the State Statistical Committee of Azerbaijan, Azerbaijani business circles work actively in Georgia. Azerbaijan invested $210 mln in Georgia over the past two years. Azerbaijani entrepreneurs are mainly involved in sectors of energy, tourism, construction, industry, etc. The activity of Azerbaijani companies, including SOCAR, in Georgia created conditions for opening 7,700 new working places. 150 Georgian companies are operating in Azerbaijan while there are 300 Azerbaijani entrepreneurs in Georgia.
“The goal of our government is further improvement, simplification of investment and business environment in the country”, says George Kvirikashvili, Vice-Minister and Minister of Economy and Sustainable Development of Georgia.
“Baku-Tbilisi-Kars is one of the most important projects for Georgia”, Kvirikashvili said.
A new 105km long section of the railway is underconstruction within the framework of the Baku-Tbilisi-Kars project. Apart from this, Akhalkalaki-Marabda-Tbilisi section of the railroad will be reconstructed in Georgia, which shall increase its carrying capacity up to 15 mln tonnes of cargo per year. The work on construction of the facility for directing trains from the Georgian gauge to the European one is underway in Akhalkalaki. The peak carrying capacity of the corridor will total 17 mln tonnes of cargoes. This indicator will at initial stage total 1 mln passengers and 6.5 mln tonnes of cargoes. Considering the implementation of the Marmara project (a tunnel under Bosporus), an access to Europe will be provided by means of the Baku-Tbilisi-Kars railway.
