Manufacturing is an important sector in Georgia, accounting for approximately 11% of the country’s GDP and 5% of its jobs. Georgia has tremendous manufacturing potential owing to its strategic geographic location. Its labor force is competitively-priced and highly-skilled, and the manufacturing sector benefits from low energy costs, proximity to raw materials and target markets, an investor-friendly climate, and low tax rates.
There are several free industrial zones in Georgia, where businesses are exempt from all tax charges (except for personal income tax). Georgia has one of the most liberal economic models in the region, free trade agreements with the CIS and Turkey and a Deep & Comprehensive Free Trade Agreement (DCFTA) with the European Union. The country is, therefore, well positioned to serve as a regional manufacturing hub, where locally produced goods can be sold to both domestic and international markets.
The Fund aims to invest in medium and large-scale opportunities, focusing on:
- Import substitution projects: Manufacturing accounts for approximately 70% of the total import imbalance, yielding investment opportunities in industries such as food and beverages, minerals, and construction materials.
- Value chain integration: Low-factor and competitive-labor costs, as well as the ease of doing business and Georgia’s strategic location provide natural incentives for manufacturers to move all or part of their production to the country.
- Large industrial projects: With HPP-driven low power costs, an infrastructure adept to handling large transshipment flows and highly-specific industrial knowledge, GCF focuses on strengthening industrial niches.
The Fund will focus on investing in the following categories of projects:
- Focus on the core infrastructure market, while building with time further exposure to primary projects with attractive risk-adjusted return profiles
- Supported by some of the lowest electricity and labor costs in continental Europe
- Investor friendly climate with liberal taxation, labor and regulatory framework
- Unique opportunities and terms for large industrial processing and manufacturing facilities as well as, Technology and IT centers