From 1999 to 2003, the foreign direct investments in Georgia were mainly limited to two international projects: construction of the new oil pipeline Baku-Tbilisi-Ceyhan and new gas pipeline Baku-Tbilisi-Erzrum (BP investment).
Georgia’s new government was charged with improving the country’s investment climate. Comprehensive economic and financial reforms were put into place, including tax, customs, financial, licensing, standardization and labor legislation reforms. The technical barriers to market entry were abolished thus eliminating institutional corruption. Simultaneously Government started the active privatization of state owned enterprises and assets. These comprehensive reforms gained Georgia international recognition as a place to do business. The country gradually began to become an attractive destination for foreign investments. Compared to 2003, foreign direct investment has increased four times in 2007. This foreign direct investment significantly boosted the country’s economic growth, and for last three years GDP grew by 10% per annum.
Since 2004, many international companies have entered the Georgian market. Corporations from the United Kingdom acquired manganese mines in Western Georgia and Port of Batumi (on Black Sea); Germans acquired large cement factories and have new ones are under construction; Czechs bought an energy distribution network and seven Hydro Power plants; Kazakh investors privatized telecommunication assets and are actively involved in real estate development projects; Tbilisi gas distribution and water utility companies were also privatized; Azerbaijan state oil company acquired the oil terminal in western part of Georgia; Gulf countries are involved in the development of large real estate projects in Tbilisi. Many large western financial institutions have opened and plan to open bank branches in the country.
The tender for privatization of Poti Port (Black Sea) and development of free industrial Zone entered into the final stage; Hamburger Hafen, Hutchison Westports, and DP (Dubai Port) and Jafza submitted their offers to the Government of Georgia.
An increased number of businessmen and tourists created an opportunity for renowned hotel flags to enter the market. Within a couple of years Kempinski, Hilton, Intercontinental, Hyatt and Radisson SAS will host their first guests, with construction of these hotels already underway.
The foreign direct investment is the main driving force of Georgia’s economy; According to the Government's middle-term development strategy FDI will exceed USD 3 billion by the year 2010. The most attractive investment directions in Georgia remain energy, real estate development, tourism & resorts and financial sectors, as well as the infrastructure necessary to see these projects to completion.
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