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Good momentum of economic and trade cooperation

Bilateral relations between Georgia and the People`s Republic of China are developing dynamically. Both sides keep close coordination and cooperation, respecting mutual interests, supporting and cooperating with each other at international level. 

On 5-6 November 2018, the Prime Minister of Georgia Mr. Mamuka Bakhtadze participated in the "First International Import Expo / CIIE" by the personal invitation of President Xi Jinping. More than 50 Georgian companies has been showcased at the China International Import Expo and signed contracts with their Chinese partners with total amount of 20 million USD.

On June 28, Free Trade Agreement was signed between Georgia and Special Administrative Region of the People’s Republic of China, Hong Kong. By signing the free trade deal with Hong-Kong, Georgia will eliminate import tariffs on 96.6 percent of its tariff lines for Hong Kong products and will give Hong Kong investors special treatment and other safeguards that are the same as those enjoyed by its local investors. The FTA with Georgia is the first free trade agreement between Hong Kong and a country in the South Caucasus.

We are the only country in the Region with free trade agreements, both with China as well as the European Union. The Agreement covers 17 fields – including commodity trade, service trade, intellectual property and emerging issues like e-commerce. 

In 2018, trade turnover between Georgia and China increased by 10% compared to the previous year and amounted to 1031.92 mln. with the share of 8.3% in total turnover.  

Georgian wine is becoming more and more popular in China. Last year 6.95 million bottles of Georgian wine were exported into Chinese market. China ranks 3rd for Georgia's wine exports. More than 40 Wine Houses have been opened in China’s various cities, such as Beijing, Urumqi, Langhou, Lishui, Yiwu,  Zhuji and etc.

Significant investment advantage
One of Georgia’s main priorities is to play a more active role in the global economy and attention has firmly turned to creating an attractive business environment for international companies in order to succeed in the region.

Through the implementation of extensive reforms to offer investors a liberal tax system and more business-friendly environment, Georgia has illustrated its commitment to opening the doors to the international investor community.

In the recent Doing Business 2019 report by the World Bank, Georgia ranks 6th out of 190 countries on the ‘Ease of Doing Business’ criteria. It stands alongside developed markets, such as the US, Singapore, Denmark, Norway and the UK, among others. 

Taxation is simple, low, flat, efficient and fair: Georgia offers investors a liberal tax system – only six flat taxes at low rates. Georgia is the 8th least tax burden country in the World according to World Economic Forum’s Global Competitiveness Index.In terms of Safety – in Crime Index 2018 published by Numbeo, Georgia stands on 5th position as one of the safest countries worldwide. In addition, according to Transparency International Global Corruption Barometer, Georgia is perceived as an essentially corruption-free destination.

One more point on ease of doing business in Georgia is that we offer a unique and simplified administration and registration service for businesses, which can be utilized to obtain the full range of required work documentation via one-stop-shop organizations.

Tourism and Real Estate:Tourism is among the fastest growing economic sectors of Georgian economy. From the health and recreational resorts, it is worth to mention the development of the resort of Tskhaltubo, which is located nearby Kutaisi, where the international airport operates and well known by its thermal waters with unique medical properties. In Tskhaltubo the Government of Georgia offers investors privatization of 14 sanatoriums (for further development of hotels), as well as development of tourism infrastructure.Development of skiing and mountain resorts is one of the priorities of the Government of Georgia. Among them are – Gudauri, Tetnuldi and Goderdzi. These destinations can be considered as "four seasons" resorts.

In 2018 we reached a record high of 8.7 million international visitors (10% y-o-y growth). Tourism is one of the key contributors to the Georgian economy with more than 3.3 billion USD in 2018 which is 19% increase compare to 2017. According to the Georgian Tourism Development Strategy, inflow of visitors will reach 11 million by 2025. It is noteworthy, that liberal visa regulation greatly contributes to the growth of international travels: visitors from nearly 95countries can travel to Georgia without visa. We are actively working with our Chinese partners to deepen cooperation in the direction of tourism. Georgia has already gained the “Approved Destination Status” (ADS) from the Government of China. We strongly believe that over the following years this will also contribute considerably to the increasing flow of Chinese tourists to Georgia.

– Investors can use free industrial zones. Companies which are operating in FIZ are free from all taxes in case of exporting products, except revenue taxes. There are four free industrial zones in Georgia: in Tbilisi, Kutaisi (two) and Poti, near the port.

Georgia has a strategic location between the two continents (GMT + 4), which allows us to export services in Europe and Central Asia.

– We have competitively priced labor force and a vast majority of younger population speaks fluent English. With a German and Russian languages standing just behind English, Georgia has considerable language skills to provide services to German and Russian speaking countries as well.

– Our 75 higher educational institutions and over 120 professional education centers ensure constant flow of high quality professionals every year.

– Utilities costs (including internet) are one of the lowest in the wide region, approximately 2.5 USD per sq.m.

Co-financing Opportunities:Potential investors have the opportunity to cooperate with the "Partnership Fund", which is a State Investment Fund and its main purpose is to encourage investments in Georgia through participation in investment projects.

Production incentive Mechanism:Government program “Enterprise Georgia“ promote an entrepreneurial culture throughout the country by stimulating the establishment new enterprise and supporting the expansion of existing operations. 

The Business division of the agency promotes entrepreneurial activity in Georgia by supporting entrepreneurs – assisting with the creation of new enterprises as well as the expansion and refurbishment of existing enterprises. The Export division promotes the export potential of the country by increasing the competitiveness of local products and the overall volume of goods directed towards international markets.

Film Production Support Program:“Enterprise Georgia“ implements a Program “Film in Georgia“. Georgia invites filmmakers to explore the unique, diverse and yet untapped filming locations with a readiness to offer top-quality service, developed infrastructure, dynamic and flexible work environment and government support.
The country has emerged as Eastern European hotspot of international production with its film industry incentive “Film in Georgia” offering 20-25% rebate on qualified local spend, diverse locations and developed infrastructure. 

Close cooperation

China is among top trading partners of Georgia and is one of the main sources for foreign direct investments in the Georgian economy. 

Both countries are cooperating more closely with each other in the areas of technology, agriculture, infrastructure and energy. Notably, Chinese companies are participating in building some sections of our railway and road infrastructure.

• Hualing Group is one of the top investors in Georgia, starting investment projects since 2007. Hualing Group has already developed the following large-scale projects: Kutaisi Free Industrial Zone and Tbilisi Sea New City, which includes Hotels & Preference Hualing Tbilisi, Hauling Tbilisi Sea Residence and Hualing Tbilisi Sea Plaza – retail and wholesale trading center, which was open in 2017. Currently, Hualing is developing another hotel in Tbilisi center, second phase of Hualing Tbilisi Sea residence, recreational park and villa project. The Hualing Group has also entered Georgian banking sector in 2012, company acquired 95% shares in BasisBank. 

• Eastern Energy Corporation – Eastern Energy Corporation represents subsidiary company of Chinese state company “State Grid Corporation of China”. The company entered Georgian market in 2004. It owns seasonal regulated hydro power plant “Khadori” which is located in Akhmeta region, between confluences of rivers Alazani and Samkuristskali. Installed capacity of HPP is 24 MW and annual average output 100 million kwh. 

• Rustavi Steel Corporation Company invested in Georgia in 2014. The factory is located in Kvemo Kartli region. Mainly, company produces iron concrete beams that are distributed and sold on the local market. Since 2014 around 13 mln GEL has been invested in the factory which employees around 60 people.

Belt and Road in Georgia

Right from the beginning, Georgia welcomes implementation of President Xi Jinping’s “Belt and Road” initiative that will bolster economic cooperation between East and West. 

In 2015, in the frames of the Belt and Road initiative, MOU on “Strengthening co-construction of the Silk Road Economic Belt cooperation” was signed in Beijing, by the Minister of Economy and Sustainable Development of Georgia and Chinese Minister of Commerce.

Georgia has held two Tbilisi Belt and Road Forum for International Cooperation in 2015 and 2017, Third Forum will be held in autumn this year. We consider that Georgia, as a historic hub connecting Europe and Asia, is a proper place for a dialogue on a Belt and Road related issues. We have also expressed interest and became founding members in Asian Infrastructure Development Bank – AIIB, as well as the first country to approve the Charter of AIIB.

Within the framework of the Belt and Road Initiative, it is important to promote the development of the Trans-Caspian Transport Corridor – so called Middle Corridor. Georgian side had been actively working to develop the Trans-Caspian international transport route together with other partner countries. 

Railway-Container shipments has been carried out through the middle corridor since 2016. The corridor has a great potential because it significantly reduces the shipment time compared to the maritime route. From China to Europe and backwards transportation can be carried out also through the railway link between port of Georgia and the new Baku-Tbilisi-Kars link. In 2016, between China and Europe has been transported 132 and in 2018, 2021 containers. It should be noted that from November 28, 2018, regular railway shipments from the port of Lianyunggang to Istanbul, will enable us to attract additional cargoes in the middle corridor.

Georgia attaches particular importance to the effective implementation of the "Belt and Road" initiative. An important step in this direction is a free trade agreement between Georgia and China, which implies the role of a transit country between Europe and Asia. 

The utilization of the country's transit potential is one of the priorities of the Government of Georgia. In this regard, special attention is paid to improvement of transport infrastructure, increase safety standards and development of logistical services. Modernization of Georgian Railway is currently underway, with an annual capacity of 28 million in the main railway line up to 48 million tons, while shipping time and operating expenses will be reduced. The Baku-Tbilisi-Kars project, which represents a significant new direction for international railway transport is good example of successful regional cooperation. Moreover, Important infrastructural project is underway, the construction of the East-West Highway and the development of modern logistics centers. The development of ports infrastructure should be underlined separately. Apart from the planned expansion projects in the Poti port, construction of Anaklia Deep sea port has started (the first phase envisages 8 million tons), which will enable us to get larger volume vessels (like Panamax and Post-Panamax). As a result of the above-mentiined projects, the transport infrastructure of Georgia will be ready to produce and transport a much larger number of cargos. 

It is important to further strengthen exchanges and cooperation between research institutions and think tanks of the two countries.

Culture and education are also traditionally important areas of our mutual cooperation.

I believe that with the joint efforts we will advance our cooperation and partnership and we will witness the new achievements in the coming years.

Design | Jiang Lingzhi