Georgia: Frontier Investments Dont Have To Be Taxing
Georgia represents an attractive prospect for investors
. Since the Rose Revolution huge efforts have been made to reform the political and economic structures of the country and the climate has consequently become more welcoming for foreign investors.
The most significant event to occur in Georgia in recent years, the Rose Revolution followed the controversial parliamentary election of November of 2003. The day after the election, many outside institutions determined that it fell short of the international standards to be considered fair and democratic. Georgians took to the streets in protest and by the end of the month President Eduard Shevardnadze was forced to resign and new, fairer elections were held.
This period of protest sparked a new era of reform in Georgia many of these reforms have been in favour of the private investor. They have, for example, eliminated almost all the licences and permits that were needed to operate a business, but in reality just stalled progress.
There has also been a massive effort to privatise many of the under-performing state run assets. Additionally, the new government eliminated export, re-export and transit tariffs and created one of the most efficient systems of property registration in the world. And they did this all while tackling corruption.
These reforms, as well as others made since the Rose Revolution, were the reason the World Bank named Georgia the top reformer in the world in 2006 and 2008.
Located in the Caucasus, on the eastern edge of the Black Sea, foreign investors have kept a keen eye on Georgia. The era since the Rose Revolution has been extremely good to investors looking towards Georgia. However, a business-friendly government is not the only thing necessary to spark investment, there also needs to be a market worth investing in. Luckily, Georgia has that part covered too.
A major piece of Georgias economic structure is energy recently, the nation fully deregulated its electricity sector, which created free and open access to the market. The reason for this deregulation was to provide support as the country begins to produce cleaner energy. Georgia has a lot of potential in hydropower energy and is run under pro-business legislation.
The Georgian Ministry of Energy estimated there are around 26,000 rivers within its borders and believes 300 of these could produce significant hydropower energy. Georgias minister of energy, Alexander Khetaguri, has proposed projects worth over 22,000 megawatts of capacity, which will make Georgia the second-largest hydropower producer in the world. He also announced that the project would be privately funded. Such a scheme could be very lucrative for frontier investors.
However, Georgia has an economy that goes far beyond energy. The country gets a lot of tourism from people coming to visit the Black Sea and has strong chemical and textile industries.
It also has an extremely profitable wine industry something many people find surprising. Georgia has over 450 species of vine and is believed to be one of the oldest producers of top-quality wine in the world. In 2011, 48 countries imported Georgian wine, but after the Russian government banned imports from the country, it has been looking to break into emerging markets elsewhere.
Georgian culture is one that fascinates and excites anyone who experiences it. Since the days of the Rose Revolution, Georgia has been on the upward swing in the world economy and if current trends continue, there seems to be no ceiling to the countrys economic potential.
by: Paul Henderson
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