MFA: Strategic opportunities for foreign exporters
Georgia responded to the pandemic right from the start by introducing strict measures that had a significant negative impact on the economy. There was a decrease in GDP by 6.1%, foreign trade by 14.8%, the downward trend in the inflow of foreign investments continued, and the number of foreign tourists decreased by 81.3% year-on-year due to the closure of borders. Conversely, foreign debt increased (by 20.9%) and unemployment increased by 2.8%. Although the increase in inflation was not so significant (by 0.3%), prices grew faster in real terms. Georgia continued to borrow abroad, and not always very advantageously.
The government has so far invested 9% of GDP (approximately USD billion) in supporting the economy. In November 2020, it launched a new state program to support foreign investment projects with a state contribution of up to GEL 1 million (approx. USD 300,000). The goal of the program is to support the growth of foreign direct investment in the country, the inflow of knowledge and technology, and the creation of new jobs in Georgia.
Among the sectors eligible to participate in the program are the production of electrotechnical and electronic products; manufacture of aircraft parts and components; production of vehicles and equipment, as well as their parts; business service export/business process outsourcing (BPO); development of warehouses and logistics centers and aircraft repair and maintenance (MRO). The government continued to strengthen health care and support companies and citizens affected by the pandemic, both through direct financial assistance and by deferring tax payments or negotiating loan repayment deferrals with banking institutions.
Post-COVID-19 opportunities
Transport industry and infrastructure
At the end of 2020, the Ministry of Economy and Sustainable Development of Georgia published the National Logistics Strategy for 2021-2030. Georgia is currently modernizing and expanding its transport infrastructure, which includes a network of highways, railway lines and seaports. At the same time, legislative convergence with the EU continues in the field of transport, which is a priority area of European integration of Georgia. According to allcountrylist, despite the achievements, a number of challenges remain.
Therefore, the Georgian government intends to develop logistics centers and is ready to support public-private partnerships in the long term. One of the biggest priorities is the development of the state-owned Georgian Railways, which needs reorganization to increase efficiency. In the coming months, therefore, new projects focused on the search for international partners are expected.
Healthcare and pharmaceutical industry
In 2020, the State Healthcare Holding was founded, which should merge up to 20 hospitals in the coming years, most of which need reconstruction. As soon as the hospitals are incorporated into the holding, a needs survey will be carried out, on the basis of which investment projects will be prepared and tenders will be announced. Today, only 15% of health services in Georgia are provided by state hospitals, while 85% are provided by the private sector. There is therefore an opportunity to start partnerships with both public and private entities. Imports of medicinal products also have potential, growing by an average of 7.5% in 2012-2019 and accounting for 5% of Georgia’s total imports.
Agricultural and food industry
The agricultural sector in Georgia has traditionally been fragmented and inefficient. More than 50% of the economically active population work in it, but it is not able to provide enough food for the entire country. A typical farmer owns a few hectares of land and a few livestock with minimal mechanization and old, inefficient farming practices.
The government has been aware of this problem for a long time, but now, in connection with the pandemic, its solution has been given a higher priority. In the long term, there will be an effort to increase the efficiency of agriculture. It is assumed that some changes and reforms will be launched in the agricultural and food sector. Opportunities will be in the supply of agricultural machinery, technologies, fertilizers or entire food processing units.
Embassy of the Czech Republic in Tbilisi
e-mail: tbilisi@embassy.mzv.cz
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