Invest

Georgian National Investment Agency

2013

Invest in Georgia Georgian National Investment Agency www.investingeorgia.org 2013 Project Management: Newspaper Georgia Today Ltd. www.georgiatoday.ge Publisher: George Sharashidze Editor: Elene Kvanchilashvili Copy Editor: Katie Davies Designers: Natalia Glonti, Nata Kipiani Photographer: Goga Chanadiri

Invest in Georgia is an annual publication of the Georgian National Investment Agency in cooperation with Georgia's leading English language newspaper Georgia Today. It gives an overview of Georgia’s economy and the reforms taken to liberalize and derregulate the market, as well as the steps taken to ease doing business within the country. Invest in Georgia gives potential investors a clear guide to the country and highlights for them the investment opportunities available.

Copyright 2013. All rights reserved.

2 Invest in Georgia

BIDZINA IVANISHVILI Prime Minister of Georgia

It is with great pleasure that I present to you my country, Georgia, and the many unique and attractive investment opportunities it offers to the international business community.

We are living in a time of extraordinary changes and shifts in global economic trends, where the interest of investors is directed to the growing economies of Asia, South America and the CIS. Georgia’s position in this group of developing economies is strong and continues to grow thanks to its strategic location, transparent business practices and favourable taxation structures.

Furthermore, despite the country’s small population of 4.4 million, our businesses enjoy access to over 350 million potential customers, without customs tariffs, thanks to free trade agreements with CIS countries, Turkey and others. We are also in the final stages of initialing a Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union. It is a groundbreaking deal for the country that will allow access to a custom-free market of 900 million people.

As the Head of the Georgian Government, I would like to emphasise the extensive work that we are undertaking to maintain the stability of our economy, which is based on fairness, equal opportunity and a strong business environment. It is as a result of this pledge that the Georgian people put their trust in me and my team to lead the country to economic prosperity –my colleagues and I are very proud of our achievements and renew our commitment to continuing working for the benefit of the whole of Georgia.

We have already made significant progress to ensure that Georgian courts are independent, that the business environment is free of monopolies and cartels, and that every company working in or with Georgia enjoys a fair and balanced system, giving them all the tools they need to succeed.

I would like to personally invite you to Georgia, so you can yourselves explore the diverse investment opportunities that the country has to offer and become a valued partner in our continued growth story.

3 Invest in Georgia

2013

Georgian Railway

140 Years of Success New Challenges

New Vision

New Strategy

Koka Guntsadze, Head of the Supervisory Board: Our short term plan is to attract new clients and to enter new markets. We will continuously improve the safety of both transportation of cargo and passenger services. Infrastructure modernization and the establishment of a modern management system is also our priority.

Our vision of the future of Georgian Railway is to become the main component of a larger transportation corridor which connects east to west, starting from Central Asia and reaching Eastern Europe through the Caspian Sea and South Caucasus.

Our corridor is one of the shortest, fastest and most comfortable.

Through capitalization on these competitive advantages we will create tighter cooperation with all participant countries- offering them not only a railway service but a whole transit chain incorporating both seaports and airports.

Mamuka Bakhtadze, General Director: According to our new strategy, we will transform Georgian Railway into a multi-modular transportation and shipping company in the short term. Then we will strengthen our competitive advantage by entering the terminal service business, too.

We will increase our contribution to the Georgian economy by concentrating on the further development of local shipping, and at the same time by capitalizing on the main geopolitical asset of Georgia – transit potential. Although pipelines, aviation, seaports and truck transportation play an important role, Georgian Railway should be the key player in increasing that transit potential. We will achieve this through continuous improvement of our infrastructure, logistics services and, more importantly, by developing the right strategy.

Our strategic goal is to compete with other Eurasian corridors by developing the fastest and cheapest transportation service between Asia and Europe. Georgian Railway is one of the main geopolitical assets of Georgia and therefore we are open and transparent to the public- freely providing information about our strategy and financial performance.

www.railway.ge

Mission – to organize freight and passenger transportation with efficient infrastructure and rolling stock services, and to make the Caucasus the most effective connection point between Europe and Asia.

Vision – our objective is to permanently develop management systems and human capital through education and the acquisition of capabilities, so allowing us to offer superior operational and financial performance.

Infrastructure vision – we provide effective railway infrastructure services; our investments are efficient and our engineering capabilities are the most advanced.

Freight vision – we are concentrated on permanently increasing freight volumes, types of cargo and geographies. We consistently improve shareholder value while never forgetting about the responsibility we have towards our communities, employees, and towards the overall economy, and in such a way we aim to benefit all stakeholders.

Passenger vision – to create a better everyday life for a multitude of people. We want to be the leader in the passenger transportation sphere. We will make this possible by offering a wide range of qualitative passenger transportation services at prices low enough to be affordable for as many people as possible.

GEORGIA: THE INVESTMENT GATEWAY TO EURASIA Georgia offers global investors a new investment destination and a variety of opportunities across a range of the country’s fastest growing sectors, including hydro power, tourism, manufacturing, regional services, logistics and agribusiness.

Investors in Georgia can enjoy the following benefits:

1. Market access through Free Trade Agreements; 2. Strong sovereign balance sheet; 3. Conservatively managed banking sector; 4. Developed transport infrastructure for trade, logistics and manufacturing (multi-modal maritime, land and air access); 5. Stable and competitively priced energy supply; 6. Skilled and Competitively Priced labor force.

Located in the Caucusus region, neighboring Russia, Azerbaijan, Turkey and Armenia, Georgia is positioned as a gateway between Europe and Asia. On the coast of the Black Sea, the country is perfectly situated for easy access from most major European, Central Asian and Middle Eastern regions.

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 to succeed in the region.

Being a major regional transport-transit hub, Georgia offers significant distribution access and opportunities through newly renovated and expanded transportation infrastructure, which includes a recently upgraded highways, rail and seaport network.

The country’s three international airports – Tbilisi, Batumi and Kutaisi – provide direct access to prominent international connections.

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 its doors to the international investor community. Furthermore, pro-business legislation and labor flexibility have contributed to overall trade liberalisation and a significant growth in local production and exports and, in addition, Georgia offers a unique and simplified administration and registration service for businesses, which can be utilised to obtain the full range of required work documentation via one-stop-shop organisations.

Since 2005, access to public services has been made more streamlined and efficient. Citizens are now able to access more than 300 types of services, such as healthcare, under the single entity of Public Service Halls. Free online access to company, land and property registries, along with other databases, has also helped promote transparency, while reducing bureaucratic burden and red tape. In 2012, Georgia’s electronic statement procurement system and Public Service Halls were recipients of the highlyregarded UN Public Service Award.

6 Invest in Georgia

Georgia- Political Stability The stability of the political system is widely considered to be one of the most important factors for international investors.

In 2012 and 2013, this political stability was reaffirmed in Georgia through successful and open democratic parliamentary and presidential elections. While these led to a change in administrations, the commitment to a programme of economic liberalisation and Euro-Atlantic integration remains unwavering.

Georgia- The economic outlook Georgia has a broad-based and diversified GDP structure which is well-positioned for sustainable growth. In 2011, the real rate of GDP growth amounted to 7.2 per cent, and in 2012, the growth rate stood at 6.1 per cent. Georgia is widely expected to maintain a growth range of 5 – 8 per cent for the years to come.

Georgia has a stable and conservatively managed banking sector. Banks are privately owned and well-capitalised, with high liquidity ratios and significant growth prospects. There have been no closures or bailouts of Georgian banks as a result of the recent global economic crisis.

The public debt performance of Georgia is also favourable, with debt ratios in steep decline since 2003. In 2012, public debt decreased by 5.7 per cent to 34.9 per cent of GDP, while external public debt went down to 27.6 per cent.

Georgia- Liberal trade regimes and access 350 million market Georgia’s liberal trade regimes provide investors with a favourable opportunity to not only access the country’s 4.4m residents, but the wider region’s markets, as a direct result of the absence of customs and import tariffs. To date, Georgia has signed FTAs with CIS countries that include Ukraine, Belarus, Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan, as well as its neighbors, Turkey, Azerbaijan and Armenia.

Georgia has already signed the European Union’s Generalised Scheme of Preference Plus, which allows the country to export over 7,200 products to the EU market with no duties or tariffs imposed. In addition, negotiating rounds on the Deep and Comprehensive Free Trade Agreement (“DCFTA”) with the EU have been concluded and it is expected that Georgia will sign the DCFTA in the near future.

In February 2012, it was agreed that the US and Georgia would commence working towards a Free Trade Agreement, which if realised, will make the country the only European state to have such a treaty with the US in place.

General Schemes of Preference for Georgia with the US, Norway, Switzerland, Canada, and Japan have also been applied for, with the result being lower tariffs on 3,400 goods exported from Georgia. In addition, Georgia is a member of the World Trade Organisation (WTO).

In terms of border control, all foreign travelers to Georgia enjoy highly accessible and service-oriented customs policies and administrative protocol. There is almost no custom duty, with 90 per cent of goods being exempt from import tariffs, with no quantitative restrictions. The average time for customs clearance is currently 15 minutes – one of the fastest and most efficient in the CIS.

7 Invest in Georgia

2012 2013

Georgia- A labor market with a young and skilled work force A critical consideration for any business looking to enter a new market is the availability of skilled labour. Together with the aforementioned advantages, the Georgian labour market is both skilled and competitively priced, which has played a significant role in the attraction of international businesses and corporates. According to Heritage Foundation 2013, Georgia has one of the most liberal labour environments, not just in the region, but globally – it was ranked third in its most recent index.

50 per cent of the unemployed population is in the 20-34 age category. The average monthly salary in Georgia amounts to USD$450, which includes blue and white collar workers, as well as C-suite employees.

The government promotes vocational education, having financed the creation of few dozen training facilities throughout Georgia.

These provide professional courses in a variety of practical subjects, with highly subsidised fees. Businesses have, as a result, enjoyed the benefits of having a potential pool of employees, which have been custom-trained.

Georgia- The international ratings In the recent Doing Business 2014 report, an annual research paper published by the World Bank and the International Finance Corporation (IFC), Georgia ranks 8th out of 189 countries on the ‘Ease of Doing Business’ criteria. It sits alongside developed markets, such as the US, Singapore, Denmark, Norway and the UK, among others.

The report concludes that since 2005 Georgia has delivered its strongest ever performance in terms of reforms across every measured area. It also notes that in the past year alone Georgia has experienced improvements in six areas, which is more than any other economy in the world.

One of the highlights in the report relates to Georgia introducing measures to make enforcement of contracts easier, through the simplification and speeding up of proceedings for commercial disputes. The guide says, “[Georgia] has strengthened its secured transactions system through an amendment to the civil code by allowing security interest to extend to the products, proceeds and replacement of collateral.”

According to the report, Georgia has accelerated the process of resolving problems related to payment ability, including the establishment of shorter and stricter deadlines for auction. It has also reduced export and import times by creating customs clearance zones.

Another influential think tank and research house, The Heritage Foundation, placed Georgia as the 21st on its Index of Economic Freedom, following nations such as Hong Kong, US, UK and Germany in 2013. Georgia’s overall ranking has improved by “13 steps” since 2012, with improvements in six of the 10 economic freedoms, including management of public finance, investment freedom and property rights. Georgia is ranked 11th out of 43 countries in the European region, having achieved the most improved score in the whole of the 2013 index.

Georgia- A corruption-free environment Georgia continues to introduce robust measures which have effectively curtailed corruption, a major problem area for the country in the past. One of the world’s leading corruption watchdogs, Transparency International, ranks Georgia as the most effective non-EU, PSU member state in terms of fighting corruption.

8 Invest in Georgia

Through the introduction of anti-corruption legislation and subsequent enforcement of the rule of law, much of the corruption has been eradicated. According to the Transparency International Global Corruption Barometer 2013, 0 per cent reported paying a bribe to the Tax Revenue service, 5 per cent to the police, 2 per cent to the Registry and Permit services and four per cent to the Judiciary system. The national average of four per cent is on par with Belgium and falls significantly below that of the US (7 per cent) and the UK (5 per cent).

While significant progress has been made in this area, further improvement can be achieved, and the administration is fully committed to strengthening its anti-corruption measures further, particularly in relation to the judiciary system. For example, reforms have already been discussed which would seek to deliver a justice system that is free of corruption and transparent at all levels.

Georgia- Foreign Direct Investment Georgia has undertaken a number of institutional reforms aimed at modernising the economy and improving the business environment. Georgia already boasts the required preconditions to become a regional financial centre, covering the Caucasus, Central Asia, Eastern Europe, and CIS countries.

The liberalisation policy initiated in 2004 has been credited as one of the key drivers of Georgia’s economic progress and has directly resulted in the increase of foreign direct investment (“FDI”) into the country. Georgia has bilateral treaties on investment promotion and protection with 32 countries, and negotiations are already underway with a further 24 states.

FDI in 2010 stood at $814.5 million, increasing to $1,117.2 million in 2011 and then dropping to $911.6 million in 2012. After the government transition period in 2012, FDI flows are forecasted to increase in a stable manner. The sector which attracted most investment in 2012 was energy, with a share of 20%, followed by manufacturing (18%) and finance (18%).

Georgia has significant potential in such major sectors, such as hydro power, tourism, manufacturing, regional service, logistics, and agriculture, all of which have the prospective to attract more capital from overseas. For instance, Georgia has a sizable hydroelectric capacity, a factor that has become an increasingly important component of its energy supplies and policies. The country’s topography and abundance of hydro resources provide it with the potential to be a dominant player in the hydroelectric markets in the wider Caucasus region.

The country’s rich heritage, scenery, diverse climate, natural mineral waters, enchanting protected areas and UNESCO heritage sites, allows Georgia to offer potential visitors year round tourist opportunities.

Furthermore, with over 21 micro-climates, which are perfect for farming, agriculture and the production of organic foods, Georgia is ripe with opportunities in the agribusiness sector.

Now is the right time to Invest in Georgia!

9 Invest in Georgia

2012 2013

10 Invest in Georgia

» HYDRO POWER » REGIONAL LOGISTICS » TOURISM » MANUFACTURING » AGRICULTURE » REGIONAL SERVICE HUB 11 Invest in Georgia

2012 2013

12 Invest in Georgia

HYDRO POWER

13 Invest in Georgia

2013

HYDRO POWER |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA Energy efficiency is incorporated into European Union ascension targets and has significant potential to enhance Georgia’s economic, environmental and social standing. Throughout recent years the generation of electricity has become one of the top priorities for the country. A self-sufficient energy supply and infrastructure ensures the safety and sustainable development of the country. Thus, the government of Georgia has shown constant support and is actively involved in strategic power infrastructural projects, so escalating the energy security of the country. Development of the hydro power sector will ensure reduction of energy import, increase of energy security, competitive energy tariffs, improvement of trade balance, and economic revival.

Opportunities in hydro power development are based on both domestic and export demand. Domestic demand on electricity supply is growing despite the global financial crisis. Huge demand on electricity export is a result of Georgia having the lowest generation cost in the region (50% lower than in Turkey). Moreover, capacity for transmission of electricity to target markets is rapidly increasing, including in the construction of high-voltage transmission lines and multifunctional sub-stations.

The key attraction of the hydro power sector in Georgia for foreign investors is the rapidly growing demand for electricity and a competitive generation cost and transmission capacity. In this regard, Georgia has the largest under-utilized hydro power generating potential in Europe, with only 35% of the total capacity currently exploited. It is expected that production will increase notably over the next several years, generating new public and private investments throughout the country.

Explore Opportunities in Hydro Power 14 Invest in Georgia

15 Invest in Georgia

2013

F • Georgia has a rapidly growing demand and competitive generation and transmission costs

16 Invest in Georgia

Expanding demand, Abundant natural resources, Favorable investment schemes...

17 Invest in Georgia

2013

ADJARISTSQALI GEORGIA LLC

Who we are:

About Tata Power

Adjaristsqali Georgia LLC (AGL) is the special purpose vehicle (SPV) set up to develop the hydropower resources on the Adjaristsqali River and its tributaries. The Adjaristsqali project is developed in cooperation between Clean Energy Group, a Norwegian based hydropower company, Indian Tata Power and IFC InfraVentures, an early stage project developer launched by IFC, a member of the World Bank Group.

TATA Power- an integrated power company is part of the Tata Group. The TATA Group, the largest Indian multinational diversified company- with its headquarters in Mumbai -was founded in 1868. Currently, it encompasses 100 companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products, and chemicals. The group operates in 80 countries worldwide. Every Tata company or enterprise operates independently. Each company has its own board of directors and shareholders, to whom it is answerable.

The joint objective for Clean Energy Group, Tata Power and IFC is to develop the Adjaristsqali project as a sustainable project from an environmental, technical and economic point of view. The Adjaristskali project is a cascade hydropower project located on the Adjaristskali river and its tributaries. Up to four power stations are planned with up to 400 MW of installed capacity. At the moment, the first scheme- the Shuakhevi -comprising a 183 MW unit -is furthest advanced with construction expected to start in Autumn 2013.

Investors plan to have the Shuakhevi project operational by the spring of 2016 and a second project- the 150 MW Koromkheti by spring 2018.

Adjaristsqali Georgia LLC 6, I. Abashidze Street 6010 Batumi, Georgia

Message to Investors Georgia has a favorable scheme for investment in hydro projects and an attractive investment climate in general. This, combined with the significant hydro potential in the country, makes it an attractive investment destination for any investor.

The development of hydro projects can be a catalyst for economic growth through the provision of jobs, training, tax income and better infrastructure. For our company, sustainable and responsible project execution means ensuring that key stakeholders benefit from the projects in which they participate.

www.adjaristsqali.com e-mail: info@agl.com.ge

Georgian Industrial Group Holding Today, the Georgian Industrial Group Holding (GIG) is the largest industrial holding in Georgia with a wide business portfolio that includes coal mining, energy generation, natural gas retail, real estate and a whole range of other sectors.

GIG adopted its current holding company structure based on 20 years of business development expertise. Since 2006, as a pure holding company, GIG Holding has invested in various industries, targeting value-added businesses with significant economic and social meaning for Georgia in both the short-term and long-run perspectives.

In the early 1990s, right after the collapse of the Soviet Union, full-scale deindustrialization began in newly independent Georgia, a process which resulted in a significant reduction in the country’s industrial capacity, especially in the heavy industry.

Many factories and machines were dismantled, and many professionals were dismissed. But a group of pioneers, with a strong belief in Georgia’s industrial potential, enthusiastically began to support downstream industries.

Comprised of a staff of nearly 5,000, the core of our success and operation is the common vision and devotion we share at GIG, as well as the effective portfolio management system the company has implemented for stable growth.

In line with the strategic goal of maintaining leadership in its focus areas and improving its presence as a nation-wide economic value, GIG has initiated investments through its development projects via the use of state-of-the-art technology, initiating upgrades to existing businesses, and constantly being on the lookout for new ideas.

The company also has ambitious plans and development strategies, especially in the energy, mining and real estate sectors. One of the most important concerns is IR activities, as we continue to move forward for greater success while investing in the future of Georgia.

Georgian Industrial Group Holding Gazapkhuli Str. 14 0177 Tbilisi, Georgia Tel: (995 32) 221 01 87 (ext 155) Fax: (995 32) 221 01 89 Website: www.gig.ge

• About 10% of power production is exported, and priority is to make Georgia an energyproducing country to supply the entire region

20 Invest in Georgia

Cost-effective, Stable, Powered to go further...

21 Invest in Georgia

2013

GEORGIA'S HYDRO POWER SECTOR encompasses a bounty of opportunities from growing domestic demand as well as from existing exportation

» The next section will introduce you to Georgia’s potential in Regional Logistics

22 Invest in Georgia

23 Invest in Georgia

2013

24 Invest in Georgia

REGIONAL LOGISTICS

25 Invest in Georgia

2013

REGIONAL LOGISTICS |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA Georgia is in a highly strategic location in that it serves as an entry gate to the Caucasus and Central Asia as well as a stepping stone to the region. In total, the addressable flows relevant for transit through Georgia amount to about 126 million tons. In liquid bulk, the most relevant addressable flows are between the Caucasus and Europe and Central Asia and Europe.

In dry bulk, the most relevant addressable flows are between Central Asia and Europe. In containers, the most relevant addressable flows are between Central Asia and Europe. Answering this demand, Georgia’s existing Transport Economy is already trans-shipment based: rail services and ports have trans-shipment ratios of 70%.

Nevertheless, the market share of Georgia in addressable flows is still quite low - particularly in Central Asia.

This in turn translates into a latent demand for transit and logistics infrastructure in Georgia, particularly in dry bulk and containers.

Explore Opportunities in Regional Logistics 26 Invest in Georgia

27 Invest in Georgia

2013

Building, Renovating, Upgrading...

28 Invest in Georgia

• Logistics accounted for around 5.8% of GDP in 2012 and about 3% of employment

29 Invest in Georgia

2013

• Georgia's strategic location gives potential benefit to the transport economy from large addressable transit flows, growing economies and landlocked resources 30 Invest in Georgia

TAV Georgia ready to step up investment in Georgia Mete Erkal, TAV Georgia’s General Manager “We believe in Georgia, that’s why TAV Georgia continues to invest in the infrastructural development of Tbilisi International Airport and of Georgian aviation. The construction of the new runway project cost $64 million USD and the extension of the terminal building will be achieved following the approval of the Georgian government” TAV Georgia, a subsidiary of TAV Airport Holding, is the operating company of Tbilisi and Batumi International Airports.

TAV Airports was established as a joint venture between the Tepe and Akfen groups in 1997 with the objective to build and operate Istanbul Atatürk Airport. In 2012, the French company Aeroports de Paris acquired 38% of TAV Airports’ shares. Today, the company, along with Aeroports de Paris, has undertaken airport operations in Turkey, France, Saudi Arabia, Tunisia, Libya, Macedonia, Egypt, Jordan, Latvia, and Georgia. The partnership of these two global airport brands in managing and building airports will result in extensive know-how stemming from the operation of 37 airports serving 180 million passengers around the world.

of new air companies and new routes. Between January 2012 and July 2013, eight new airlines began services to Tbilisi.

These include Qatar Airways, Estonian Air, Aegean Airlines, Alitalia and UTAir in 2012, IsrAir, Air Onix and Al Naser Airlines in 2013. Additionally, a local airline, Fly Georgia, was established in August 2012, and began scheduled flights at the beginning of 2013.

Airport traffic grew for the third consecutive year in 2012, with an impressive growth trend reaching 17% in 2010, 28% in 2011 and 15% in 2012. The first half numbers in 2013 also indicate significant growth- 16% -and this growth-rate is expected to continue throughout the rest of the year with the announcement of new routes this summer. By the end of the year, nearly 1.5 million annual passengers are expected to pass through Tbilisi International Airport.

The Batumi international Airport project (opened in May 2007), became the second investment made by TAV Airports in Georgia. With its new runway, taxi route, apron and terminal building, Batumi International Airport became the first airport used jointly by Turkey and Georgia. This cooperation plays a significant role in the development of the region, as well as in reinforcing the strong ties between the two countries.

TAV Georgia continues to move forward with new construction and innovative environmental projects in order to provide and maintain the best service quality at Tbilisi and Batumi International Airports.

Tbilisi and Batumi International Airports have important and preferred places among TAV Holdings international projects.

Located at the crossroads of Europe and Central Asia, Georgia is a bridge connecting several important economic regions. It is a key link and the shortest transit route between Western Europe and Central Asia.

Tbilisi International Airport is a product of modern technology. The new passenger terminal provides 24/7 facilities including check-in services, 32 passport control points and three boarding bridges operating within a 25,000 square meter space.

Currently, there are 30 scheduled airlines, 200 weekly departures, and direct connections flying to 40 destinations. Tbilisi International Airport has enjoyed constant growth as a result

Tbilisi International Airport 0158 Tbilisi, Georgia Tel: (+995 32) 231 02 65 www.tbilisiairport.com www.facebook.com/tavgeorgia

• Road infrastructure

is rapidly developing throughout Georgia

32 Invest in Georgia

Poti Free Industrial Zone The First Free Industrial Zone (FIZ) in the Caucasus region located in the port city of Poti, Georgia has been fully operational since November, 2010. The Administrator and Organizer of the project is RAKIA GEORGIA FIZ LLC founded by RAK Investment Authority (RAKIA), a government of the Ras Al Khaimah, U.A.E. nodal agency.

The Poti FIZ project, covering a territory of 300 hectares, is situated on the historic Silk Road connecting Europe with Asia. As the Poti FIZ is situated right next to the Poti port, it gives companies the advantage of low cost for import and export due to the low local logistic/transportation cost. A further notable factor is that there are no taxes applicable in the Free Zone for import/ export of raw materials and goods. Companies are also exempt from VAT, corporate profit and property taxes, as well as tax on dividends. The territory is well-connected to the railway system and highways joining the growing economies of the Caucasus region, Turkey and Central Asia. Poti, situated on the Black Sea coast, is the shortest way from East to Western European countries and vice-versa.

We offer all the benefits typical to other free zones of the world and some additional benefits specific to the Poti Free Zone: • 100% foreign ownership in the free zone • 100% capital and profit repatriation • Power supply at competitive rates (due to hydro-electric power generation) • Low land and facility leasing rates • Simple and easy registration procedures During the recent period, Poti Free Industrial Zone has received an extremely positive response from investors from various countries such as Azerbaijan, Armenia, Ukraine, Iran, Turkey, UAE, Cyprus Republic, USA, India, and others, and already more than 250 companies have taken licenses to set-up businesses in the Poti FIZ. These investors represent a variety of sectors, such as fragrance manufacturing, rice processing, production of building materials, manufacturing of ethanol, and general trading. And some of these companies have already started construction of their factories and units in the Poti FIZ. RAKIA Georgia FIZ LLC welcomes companies to Poti, Georgia, and invites them to experience its excellent conditions for manufacturing & commerce.

For more information please visit our website: www.potifreezone.ge

• Georgian Railway concentrates on the further development of local shipping, and at the same time is able to capitalize on the main geopolitical asset of Georgia – transit potential

34 Invest in Georgia

TRANS CAUCASUS TERMINALS We strive to avoid a negative influence on nature by shipping containers by more ecological transport means – railway, and as such we support all green initiatives.

Who we are: Trans Caucasus Terminals LLC (TCT), a full subsidiary of JSC Georgian Railway, was set up in 2009. Currently, the company operates two container terminals- one in Poti and another in Tbilisi.

TCT services: The company offers: integrated logistics services by rail/road in Georgia and to-door services; general cargo loading/discharging onto railcars; customs office services; and bank outlet services. TCT also provides container transportation from Poti to Tbilisi terminals and, in Tbilisi, transportation direct to our clients’ doors.

In addition, apart from traditional services, the company also offers some new services to its partners, in particular extraditing containers to Batumi port (terminal service) and extraditing from any country in the world via Batumi or Poti ports to any destination in Georgia.

TCT is also able to offer the transportation of liquid materials via containers, be it wine or chemicals, around the world.

In the short-term perspective, the company plans container extradition to Russia as hundreds of Georgian companies receive permission to export wine there.

Trans-Caucasus Terminal plans to build a closed customs warehouse at the Tbilisi container terminal (logistics center).

It is also a future aim of TCT to construct a terminal at Vale, the border city of Turkey and Georgia, and we are also considering having our own container park, i.e. having universal containers which will be circulated around the world.

Message to Investors: Levan Jgarkava, director I have a dream to transform my company into a well-known logistics company overseas by 2020, shares of which will be placed on the world stock markets. In addition, I plan that the company will have container terminals and logistics centers both in the Caucasus region as well as in the countries surrounding the Caspian Sea.

WWW.TRANS.RAILWAY.GE N15 Tamar Mefis Avenue, Tbilisi, Georgia

Phone: +995 32 214 99 05 Email: Transcaucasusterminals@railway.ge

• Georgia's strategic location and latent demand for infrastructure offer enormous economic opportunities for direct GDP impact, economic integration, and trade facilitation 38 Invest in Georgia

39 Invest in Georgia

2013

THINK GEORGIA- THINK LOCATION! Serving as an entry gate to the Caucasus and Central Asia, Georgia is a strategic stepping stone to the entire region.

» The next section will introduce you to Georgia’s potential as a Tourism Destination

40 Invest in Georgia

41 Invest in Georgia

2013

42 Invest in Georgia

TOURISM

43 Invest in Georgia

2013

TOURISM |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA The number of international visitors to Georgia has grown rapidly over recent years. In 2011, that number reached 2,822,363, representing a 39% growth, and in 2012 the number of international travelers stood at 4,389,256, demonstrating a 56% increase over the previous year. Georgia already had ~4 4 million visitors during the period of January- September of 2013 - a 25% increase compared to previous year.

Already-operational international hotel chains include Sheraton, Radisson, Marriot and Holiday Inn, with a number of others under construction such as Hilton, Intercontinental, Rixos, and Kempinski. With the increase in visitors, the medium-term demand is already outstripping the current supply.

Distinctive among the world’s nations in its biodiversity, Georgia boasts rich natural and cultural resources and is home to more than 12,000 historical and cultural monuments, four of which are included in the list of UNESCO World Heritage Sites. Tourists arriving to Georgia for a relaxing holiday can choose from 103 resorts and visit any of the 2400 mineral waters springs... or simply head for the coast. Nature-lovers will be interested in exploring the eight national parks and 31 protected areas throughout Georgia. The winter resorts of Gudauri, Bakuriani and Mestia offer skiers and holidaymakers an extraordinary winter and summer vacation. And for those who enjoy gaming, Georgia can provide a high quality gaming experience equal to other world class gambling destinations- without the restrictive legislation such as exists in Russia, Ukraine, Turkey, Azerbaijan, Israel and Kazakhstan which restricts people from enjoying gambling facilities.

Georgia offers a variety of investment opportunities in the tourism and hotel industry, including beach resorts, winter-ski resorts, summer mountain resorts, mineral water and spa resorts, gaming facilities, cultural attractions and much, much more!

Explore Opportunities in Tourism 44 Invest in Georgia

45 Invest in Georgia

2013

46 Invest in Georgia

47 Invest in Georgia

2013

Diverse, Inviting, Inspirational...

48 Invest in Georgia

• Potential locations for beach resorts include Batumi, Ureki, Kobuleti, and Anaklia 49 Invest in Georgia

2013

• The government is fully committed to the provision of basic infrastructure

50 Invest in Georgia

51 Invest in Georgia

2013

52 Invest in Georgia

• Potential locations for summer mountain resorts include Mestia, Gudauri, Bakuriani, Goderdzi and Kazbegi

Active, Challenging, Ecological...

53 Invest in Georgia

2013

• Potential locations for winter-ski resorts include Mestia, Gudauri, Bakuriani, and Goderdzi 54 Invest in Georgia

55 Invest in Georgia

2013

56 Invest in Georgia

Relaxing, Tranquil, Romantic...

• Potential locations for the development of spa resorts include Tskaltubo and Akhtala 57 Invest in Georgia

2013

• Georgia's majestic landscapes allow for a wide range of tourist activities such as camping, skiing, Heli-skiing, climbing, rafting, fishing, hiking, hunting, and more

58 Invest in Georgia

Unique, Historical, Educational...

59 Invest in Georgia

2013

• Georgia, as the cradle of wine, has a long tradition of winemaking. And the Qvevri is the most exotic part of the process...

60 Invest in Georgia

All About Wine

61 Invest in Georgia

2013

Cheesy, Fruity, Fresh...

62 Invest in Georgia

• Georgia is home to a variety of native cheeses, coming from all corners of the country 63 Invest in Georgia

2013

• International brand hotels Sheraton, Radisson, Marriot, and Holiday Inn are operational and ready for Georgia's hosting of the Youth Olympics in 2015

High-Standards, High-quality, Growing demand...

64 Invest in Georgia

65 Invest in Georgia

2013

• The number of visitors to Georgia increased by 38% in 2011- reaching 2.8 million, and by 56% in 2012- reaching 4.4 million 66 Invest in Georgia

ADJARA GROUP HOSPITALITY Message to Investors: Our company owns and operates business and resort hotels around Georgia and we are always happy to host guests from all around the world- to serve them with exceptional service with the touch of iconic Georgian hospitality. Therefore, we will be glad to host all possible international investors, share our knowledge and experience, and always support new initiatives, as once again we are inspired by the fact that what we do today in our business is directly contributing to our country’s development.

Valeri Chekheria, CEO Adjara Group Hospitality is the fastest growing privately held owner and operator company in the Georgian hospitality industry.

Since 2010 our growth has been both qualitative and quantitative as we continue to build our team of top industry talents and implement new initiatives and best practices from all around the world. We are inspired by the fact that all the projects that we do today in our business are directly contributing to the development of Georgia’s hospitality industry. Which is why we consistantly do our best to exceed our guests’ expectations, serve them with exceptional service, and provide limitless hospitality.

In the span of three years we have: • Opened and operated the full-service hotel Holiday Inn Tbilisi with 252 keys and the biggest hotel in Georgia by number of rooms (December, 2010) • Founded and developed the first Georgian Hotel Brand – Rooms Hotels, with its unique concept of interior design (November, 2011) • Opened and operated the first project of Rooms Hotels – Rooms Hotel Kazbegi, a mountain design resort with 156 keys (July, 2012) • Opened and operated Rooms Restaurant in Borjomi (October, 2012) • Founded new Destination Management Company – Limitless Hospitality (February, 2013) In the pipeline for the next two years: • Opening of Rooms Hotel Tbilisi – a Design City Hotel with 110 keys (Q1, 2014) • Opening of Holiday Inn Batumi – a Resort hotel with 150 keys (Q3, 2014) • Opening of Rooms Hotel Borjomi – a Design hotel with 112 keys (Q2, 2015) Since opening, Adjara Group Hospitality has aimed to-and continues to -set industry-leading standards through its accelerated growth, employee motivation and development.

67 Invest in Georgia 1, 26 May Square, 0171 Tbilisi, Georgia, T: +995 32 2020020, E: contact@adjaragroup.com

2013

• Due to new tourist routes which offer stop-offs, new maps, and an information hotline for tourists, it is now easier than ever to navigate and enjoy Georgia's capital - Tbilisi 68 Invest in Georgia

69 Invest in Georgia

GEORGIA'S TOURISM SECTOR

offers a vast number of investment opportunities in a variety of directions to suit all four seasons: beach resorts, winter-ski resorts, mountain resorts, spa and health resorts, and also within the gaming business.

Âť The next section will introduce you to Georgia's potential in Manufacturing Sector

70 Invest in Georgia

71 Invest in Georgia

2013

72 Invest in Georgia

MANUFACTURING

73 Invest in Georgia

2013

MANUFACTURING |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA Georgia’s natural advantage as a gateway between Europe and Asia provides many benefits to investors in the manufacturing sector. In particular, Georgia offers competitive labor and energy costs, a logistics network, and a business-friendly environment for serving the region, as well as numerous raw materials. Salaries in the industry are competitively low and, given the high level of unemployment in Georgia, are expected to remain so.

Manufacturing accounts for 11% of GDP and around 5% of employment. The food and metals industries provide the largest industrial base for Georgia, while textile, transport equipment, and metals are the fastest growing industries.

By entering Georgia, companies can benefit from the growing regional market and further easy access to 350 million markets with Free Trade Agreements. Within 24 hours, 84 million customers in six countries can be reached and, in two days, 260 million in ten countries.

With the establishment of the Free Industrial Zones in Georgia there are new incentives and opportunities to produce and export goods with a minimal tax burden because, in the FIZs, businesses are exempted from all tax charges except Personal Income Tax. The manufacturing sector poses opportunities in two main directions: • The large import overhang of goods, that are not usually traded extensively between countries, provides potential for regional import substitution in food processing, construction materials, household goods, ceramic and glass products, packaging, and more.

• Georgia’s current advantages in terms of handling large trans-shipment flows, its business stability, low cost of power generation, and its existing raw materials and intermediate products provide opportunities for large industrial projects such as iron, steel and aluminum production, and more.

Explore Opportunities in Manufacturing 74 Invest in Georgia

75 Invest in Georgia

2013

• The average monthly salary in the manufacturing sector is USD 400 76 Invest in Georgia

Competitive costs, Abundant materials, Free Trade incentives...

77 Invest in Georgia

2013

GEORGIA - FULL OF GREEN ALTERNATIVES For Georgia, green growth means the opening of its rich natural capital to new business opportunities that drive economic growth and development, whilst simultaneously ensuring that these assets continue to provide the resources and environmental services on which our well-being relies.

THE GEORGIAN GOVERNMENT PROMOTES CLUSTERS OF CLEAN ENERGY-BASED MANUFACTURING

The Georgian government strongly supports the establishment of new industrial processing facilities as an integral part of its vision that a clean hydropower base can support entire clusters of clean energy demanding industries. New synergies for industrial collaboration can be key to achieving the ambitious goal of creating an environmentally sound industry.

Georgia is well equipped to meet this challenge. The rich natural assets possessed by the country are a significant precondition to thinking beyond such limitations, as energy and freshwater, space facilities and workforce (ILO core conventions are ratified) are all available in sufficient amount. Besides which the country has favorable tax-free regimes, offering investors a dynamic business environment with the perfect prerequisites for growth and profit.

AN ECO-INDUSTRIAL PARK

Be Green. Be Georgia. www.greengeorgia.ge

A more concrete realization of the eco-cluster approach is the idea of creating an eco-industrial park in Georgia. In this concept, value is added to businesses when waste products, water and energy are recycled back into the system. The MoESD is committed to pursuing the idea of creating a cluster of companies that allows them to enjoy benefits not only through their physical proximity, but also via actual material flows. The underlying logic is to understand nature’s “production cycle” which never generates waste, but which is based on cycling nutrients and energy. New synergies for industrial collaboration can be the key to achieving the ambitious goal of creating an industry based on ecological principles.

Ajara Textile Ajara Textile was set up in 2008 through Turkish investments when an old tea factory was purchased and Ajara Textile established as a local subsidiary. In December of 2008, the company began producing three lines and rapidly increased that number to nine. In 2011 Ajara Textile opened a second factory and plans to expand its business in 2014.

Ajara Textile produces apparel for internationally recognized brands such as Puma, Adidas and Nike. All products are labeled “Made in Georgia.”

Currently, the factory employs more than 1200 people from neighboring villages and the number of employees is expected to rise to 2400 as a result of the future expansion of the company.

Message to Investors:

Cengiz Ozkendir, Director of Ajara Textile Our company’s main goal is to create more jobs and employ more local people. In addition, our chief mission is to produce high-quality products that meet international standards. Because our clients include highly visible international brands like Puma and Adidas, we go through great pains to produce superior quality apparel cloth. Another goal of the company is to strengthen and increase capacity. With regard to the market, I can say that Georgia is the best place in terms of reliable tax policy– especially in the textile business. Georgia also offers low-cost labor, cheap land, low energy costs and preferential access to the EU market, all of which creates a fertile environment for production.

Tbeti Street 3, Batumi, Georgia, Tel: +995 0422 25 05 23, e-mail: info@ajaratextile.com

BTM Textile Who we are: BTM Textile Ltd, a subsidiary company of the Turkish-owned ATK Textile Company, is one of the leading textile companies in Turkey. In1980 the company bought a tea packing plant in the Khelvachauri District in southwest Georgia, later converting it into an apparel production plant.

BTM Textile represents the biggest textile investment in Georgia. Employing more than 1,000 people, the company contributes greatly to the development of Georgia’s textile industry. Its plant covers 150,000 square feet and is equipped with the latest modern mechanical equipment. The plant first operated 10 production lines, but after 2008 that number was increased to 18 lines. The company specializes in ladies’ and children’s wear (trousers, blouses, dresses, shirts, etc). It also supplies high street European chains like the UK’s Marks & Spencer, Spain’s Zara and the Netherlands’ Mexx, as well as Holland’s Tommy Hilfiger.

The production line operates using a fully computerized system. Software developed in-house enables the quality of the product to be continuously monitored. All data is monitored by garment technologies and employees ensure its quality at all times. The Quality Assurance Department works on AQL 2.5.

In order to achieve product safety, BTM Textile implements a metal-free zone on the premises. There is also a product safety officer in charge of all broken needles, metal detectors and fusible procedures.

In addition, the company recently built a second textile plant located near the Khelvachauri BTM textile

factory. This plant will produce women’s jeans trousers and will employ around 1,000 local residents.

The plant will be officially opened in the coming month and will produce a new line of jeans-trousers.

The company plans to expand its line of clothing in the future.

Message to Investors: Tülin Canbuldu, Director of BTM Textile Our decision to enter the Georgian apparel market was very simple. Georgia’s low-cost labor market, as well as the country’s friendly business regulations, has proven to be very impressive and played a decisive role in our investment decision.

Georgia offers cheap energy costs, low bureaucracy and a stable economy. Another important advantage is the company’s base location. Adjara is in close proximity to the Turkish border, which is very convenient. I think that our plant provides a good example of the extraordinarily quick surge of foreign investment that has taken place over the past few years in the Georgian economy.

We believe the Georgian government has worked hard to promote the apparel sector to foreign textile brands, especially with regard to assisting Turkish apparel giants to expand their networks in Georgia.

In addition, the Georgian government offered various incentives to make our choice more alluring.

Daba Khelvachauri Agmashenebeli St. No 60 Batumi, Georgia Telephone: 0422 25 82 20 E-mail: info@btmtextile.com

Business-oriented, Creative, Productive...

• By entering Georgia, companies

can benefit from the growing regional market and Import Taxfree access to 900 million markets provided by FTAs and DCFTA 81 Invest in Georgia

2013

HeidelbergCement in Georgia – A SHORT HISTORY OF DEVELOPMENT / EXPANSION Since 2006 HeidelbergCement has been carrying out its activities in Georgia and up to date has made more than 200 million Euro investments that were mainly oriented on existing cement plants modernization and expansion in concrete business line. HeidelbergCement, that operates 3 cement plants in Kaspi and Rustavi, with total capacity of 2 million tons per year expanded in cement production in west of Georgia - in Poti and will invest for the new integrated cement plant in Kaspi. HeidelbergCement rapidly expanded in concrete business line as well and today it runs 8 concrete plants in Georgia.

Process of investment in cement and concrete business line continues.

HeidelbergCement, as one of the biggest investors in Georgia is focusing on social, cultural and environmental projects implementation that underlines commitment of the company to the public welfare. HeidelbergCement's huge social project “TbilisiMarathon”, dedicated to charity and healthy lifestyle promotion is really a success story for the country as well. “TbilisiMarathon” is a major cultural change in Georgia that promotes country worldwide and at the same time develops truism.

HeidelbergCement is the global market leader in aggregates and a prominent player in the fields of cement, concrete and other downstream activities, making it one of the world’s largest manufacturers of building materials. The company employs some 52,500 people at 2,500 locations in more than 40 countries.

• Highly attractive Import Substitution opportunities can be found in food products, construction materials, household goods, ceramic and glass products, packaging materials, and more 82 Invest in Georgia

JINDAL PETROLEUM One of the largest investors in Georgia. Invested over 150 MMUSD so far.

Navin Jindal Chairman of Jindal Group Member ember of Parliament

Manish Kharbanda Beka Odisharia T.K. Majumder

Jindal Petroleum (Georgia) Ltd, a subsidiary of Jindal Steel and Power Ltd., was set up in 2008 as a part of Jindal Steel and Power’s diversification drive. It is a company which has acquired seven Oil & Gas blocks worldwide including five in Georgia, one in Bolivia and one in India. Jindal Petroleum Georgia focuses on conduction oil and gas exploration and production and since May 2009, the company has been conducting exploration works in Georgia.

Exploration Block IX SHIDA KARTLI REGION License area 3 872 km2; Block X KAKHETI REGION License area 5 880 km2; Block XIII-A KVEMO KARTLI REGION License area 1 295,3 km2; Block VII-A SAMTSKHE JAVAKHETI REGION License area 6 010 km2 (100% Participating Interest); Exploration and Production Block XI-B Tbilisi and Rustavi suburbans GARDABANI & SAGAREJO Regions License area 635 km2 (100% Participating Interest).

Portfolio comprises: - 32.68 MMUSD as Signature Bonus for 5 Blocks - Up to 400 people in Georgia - One of the largest investors in Georgia - Over 150 MMUSD so far Its obligation of delivery of Baseline Oil – Delivered 16,000 Tons of Baseline oil in 1st year and 3600 Tons in 1st quarter of 2nd Year apart from share of Profit Oil, Only Baseline Oil value approx. 15 mln USD (100 USD / BBL).

The company’s mission is to harness national and international oil and gas opportunities for the country’s energy security and prosperity, with a commitment to health, safety and environmental awareness whist maximizing each shareholder’s value.

In total, these five blocks have a recoverable reserve of 234 MMBBL of Crude Oil and 840 BCF of Gas. The company is operator for all the blocks and is currently producing about 550 bbl/day.

Georgia has a favorable location from both a geological and an economical point of view, including: good quality of oil, comparatively shallow depths of wells and a comfortable infrastructure for transportation and oil selling.

JPGL and Jindal Petroleum Operating Company is a part of the O.P Jindal Group, which is more than a US$ 18 billion multinational and multi-product conglomerate with business interests spanning Steel Manufacturing, Power Generation, Mining & Oil & Gas among others.

Jindal Petroleum Georgia Tbilisi, Lilo stantion, #9 Chirnakhuli str.

Tel: 995 322 40-71-23

New/Expansion Projects

Chhattisgarh: A 7 MTPA integrated steel plant in phases, a 2 MTPA cement plant and a 1,600 MW captive power plant with a total investment of over US$ 7 billion is being set up at Raigarh.

Jharkhand: A 12 MTPA integrated steel plant with a total investment of US$ 10 billion. In the first phase, the company is setting up a 6 MTPA integrated steel plant and a 1,320 MW captive power plant at Patratu. Also, it plans to set up a 6 MTPA integrated steel plant at Asanboni and a 1,320 MW captive power plant at Godda.

Odisha: A 12.5 MTPA integrated steel plant is being planned at Angul.

In addition to the existing 4.5 MTPA Pellet Plant, the company is setting up another 4.5 MTPA iron ore pelletisation plant at Barbil.

• Opportunities arising from Georgia’s large trans-shipment flows, low cost of electricity and resources include iron, steel and aluminum production 84 Invest in Georgia

The second direction is restoration of a Pipe Rolling Mill where seamless pipes are produced for use in engineering, construction and in the oil and gas industry. Such production was suspended for a long time until, in 2012, 8,000 tons of seamless pipes were produced. This year we plan to reach up to 40,000 tons, and next year – up to 100,000 tons. The actual Pipe Mill capacity is 360,000 tons of seamless pipes of large diameter per year, but for this major modernization is required.

RUSTAVI METALLURGICAL PLANT Who we are Since January 2012, Rustavi Metallurgical Plant has been under the management and ownership of Rustavi Steel LLC, a new legal entity the purpose of which is to revive the long and proud tradition of steel production in Rustavi which first started in 1948. The factory annually produced 1.5 million tons of steel and was the largest producer in the South Caucasus. After the collapse of the Soviet Union, supplies of raw material and relations with consumers were curtailed and the plant ceased functioning in 1993. The new team of managers of Rustavi Steel LLC chose a course towards large-scale reconstruction and the development of a modern steel-casting enterprise, which will produce a high quality output.

Products and Sales Geography At present, the factory successfully functions and produces reinforcing bars, seamless pipes, square billets, pig-iron, metal constructions, spare parts and various by-products which are sold within Georgia, in neighboring countries and also in many countries of the EU, Asia and Africa.

Business Directions At present we work in three directions. First – steel production through the re-melting of scrap metal in electric furnaces. Production in this direction has increased: in 2011, 36,000 tons of steel was melted; in 2012 this amount was 78,000 tons and in 2013 we plan to produce 100,000 tons. By the end of 2014 we plan to reach capacity levels of 250,000 thousand tons of steel melting from scrap metal.

The third direction of our work, which is very important in the restoration process, is the restart of the Sinter Plant and Blast Furnace Complex for production of 750,000 tons of pig iron per year, which we mostly plan to export at the initial stage. At present we are negotiating with Dashkesan iron ore mines in Azerbaijan in order to mutually consider restarting production.

International Certification The Rustavi Metallurgical Plant operates according to international standards and is certified by authorized international organizations. The plant’s strategy for quality control is oriented towards satisfying its customers’ requirements and establishing trust in the plant’s products.

The plant is certified according to ISO 9001 standards and has API (American Petroleum Institute) certification for the production of seamless pipes. Certification for the European Market, CE (Conformite Europeenne), has also been received from TUV NORD. Also, the plant has GOST 632, GOST 633 and GOST 8731 certification for the production of seamless pipes and rebar according to Russian standards, and DSTU 3760:2006 certification for the production of rebar according to Ukrainian standards.

Rustavi Steel LLC 12 Gagarini Str., 3700 Rustavi, Georgia Tel.: +995 32 2 606699 Fax: +995 32 2 606699 (3030) contacts@rustavisteel.com www.rmp.ge

GEORGIA'S MANUFACTURING SECTOR provides opportunities for regional import substitution and large industrial projects Âť The next section will introduce you to Georgia's potential in Agriculture

86 Invest in Georgia

87 Invest in Georgia

2013

88 Invest in Georgia

AGRICULTURE

89 Invest in Georgia

2013

AGRICULTURE |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA Georgia has over 21 micro-climates varying from cool and dry to warm and humid. These diversified microclimates allow for a longer than normal harvesting season and a wide range of growing conditions.

Agriculture and agribusiness account for 8.4% of the GDP, 17% of trade volume and 53% of employment.

Georgia is reliant on processed food imports (12.1% of total imports), while export is balanced between fresh and processed (9.4% and 10.5% respectively). The average gross monthly salary in the agricultural sector is USD 220 and salary growth is moderate due to high unemployment in the country.

Georgia as an agrarian-oriented country has a significant rural population. However, as in many other transition countries, agriculture in Georgia is usually termed as subsistence farming and the majority of farmers only have small parcels of farmland. Nevertheless, the agriculture sector is well diversified, with its export strengths being nuts, fruits, wine, and livestock.

Georgian agriculture is in a period of transformation, which creates a vast number of investment opportunities: • Import Substitution Opportunities – meat, dairy products, onions, potatoes, and more.

• Export Opportunities – traditional strong sub-sectors like wine, walnuts, hazelnuts, lamb (meat), and more.

• Productivity Gain Opportunities – tomatoes, apples, cucumbers, stone fruits, citrus, and more.

Explore Opportunities in Agriculture 90 Invest in Georgia

91 Invest in Georgia

2013

Diverse, Organic, Expandable...

92 Invest in Georgia

• Georgia offers pure, rich and pesticide-free soils - ideal for organic production

93 Invest in Georgia

2013

Low labour costs, Clean soil, Untapped potential...

• Import Substitution

Opportunities - in 2012 the sector trade balance was 762 million and the deficit is continuing to widen 94 Invest in Georgia

Castel Georgia

production, it uses only the highest quality raw materials and utilizes the latest contemporary technology. Castel Georgia uses unique spring water and natural ingredients which adds a special quality to the company’s products.

The company’s plant bottles beer under the following trademarks –Argo, Herzogi, Germanuli, Argo Export and Castel Beer. Castel also produces soft drinks under the trademark name Zandukeli.

Who we are: Castel Georgia’s beer and soft drink products have been available on the local market since 1997 when Castel, a wellknown French wine, beer and soft drinks group, decided to enter the Georgian market. The Castel Group invested a large amount of capital in the construction of the Lilo beer factory, which was furnished with modern state-of- the-art production equipment. At the time, this move represented the largest 100% foreign investment within the Georgian business community. The company’s strategy has been and will continue to be providing Georgian customers with highquality services and products.

There are currently 250 people employed at the beer factory. The company produces Georgian beer, while taking into consideration the German experience. The Castel Group utilizes modern technology during the production process and adheres to the implementation of European standards, while simultaneously maintaining historical traditions.

Message to Investors Temur Chkonia

The company’s mission is to further strengthen its position on the local market. Be it premium beers like Castel Argo and Castel Herzogi, or the more simple Germanuli beer (one of the most popular brands on the Georgian market), the company always strives to meet the demands of its consumers.

The Castel management has made great efforts in this regard and will continue do its best to achieve this goal.

The Castel Group is comprised of a strong team-oriented group of foreign experts from Germany and the Czech Republic who assist Georgian specialists in the production of high-quality products that are on par with international standards. Their extensive experience also helps to ensure and maintain the image of our beer and soft drink products as a reliable brand with a strong image in the beverage business.

Castel Georgia’s turnover is approximately 20 million litres per year. However, the company plans to double this figure in the coming years.

Today, the company controls 20% of the local market and is now focused on Georgian consumers. That said, the company is currently also eyeing opportunities to launch exports.

One of the main advantages of the company is that during

Lilo Brewery, Kakheti Highway Tbilisi, Georgia, 0151 Tel: 577652269 E-mail: lilo@castel.ge

• Georgia has a rich tradition of

viticulture, as well as in fruits, nuts, and tea production- but there are also dozens of other products that, with the right investment, can be produced and exported too

96 Invest in Georgia

97 Invest in Georgia

2013

• Given that starting points are relatively low, productivity gain potentials are significant across a broad range of crops and livestock 98 Invest in Georgia

In 1994, the joint-stock company “Rektifikati”- later renamed the JSC GOMI SPIRIT AND VODKA COMPANY -was founded by Dima Dugladze and Malkhaz Kanchaveli (who is the current CEO of the company) in Gomi village in the Khashuri region of Georgia. Since that time, the company has focused on building sustainable growth by adhering to the core values and business principles that are the cornerstone to corporate philosophy.

Today, with exclusive emphasis on quality, the company is a Leading Alcoholic Beverage manufacturing company in Georgia, having achieved success through commitment to storied brands, to its consumers, and to local communities.

The Gomi factory started operations in 1903 using raw material: wheat, bread, maize, and oats. During this period, the production of the factory did not exceed 150 – 200 L per 24 hours.

From 1950, the factory started using sugar beet nectar (melasa) in order to produce its spirits, and the production volume of the factory increased to 500 D/L. In the years following this change, this quantity increased to 1500 D/L per 24 hours. During the period, leading up to 1997, the facto-

ry focussed only on sugar beet nectar (melasa) and Chacha raw spirit production.

In 1997, the factory was completely reconstructed and different kinds of construction-montage activities were carried out. The previous system of two permanent-action four-block spirit producing machines (able to produce 1800-2000 D/L in 24 hours), was completely changed – with the usage of new technologies greatly facilitating the automated operation of the equipment.

Taking into consideration the experience of CIS and European factories, a new modern technology scheme was utilized, which enabled the Gomi factory to produce high quality wheat spirits.

The adoption of best practices and world-class technologies has enabled the company to ensure the best product quality. For over 100 years, the company has been internationally recognized for its outstanding performance and confirmation of its high quality products and services can be found in the many prizes and awards kept in the company’s collection, such as the gold and silver medals awarded to the Gomi Spirit and Vodka Company at various international exhibitions.

Gomi, Khashuri Region, Georgia. Tel: 260 12 21; 261 01 31. E-mail: info@fbd.ge

Georgia's Agriculture - organic production

• Some advantages specific to Georgia include good growing conditions, low investment requirements and low-cost labor 100 Invest in Georgia

TR Company Who we are: The company TR Georgia Project 2 LLC was established in 2011. It owns more than 6,000 hectares of agricultural land near the village of Iormuganlo in the Kakheti region.

The mission of TR Georgia Project 2 is to increase the competitiveness of the agricultural sector within international and local markets through the synergy of people, materials and the latest high-tech equipment.

In 2013, the company carried out the sowing of wheat, corn, barley, colza, soya, pomegranate, and the best variety of pistachios and hazelnuts, as well as high quality vineyards. The company owns and utilizes the latest high-tech equipment including John Deere tractors, a full technological line for raw and cereal cultures, a center-pivot irrigation system, and a stationary irrigation system.

In the coming years, the company plans to set up the following factories– a grain dryer and grain storage factory, as well as a forage-processing plant, a poultry farm complex, a meat

and dairy production plant, a fertilizer manufacturing plant, a greenhouse for a variety of vegetables (cucumber, tomato, pepper, etc) and a modern irrigation system for the irrigation of more than 5,000 hectares of land.

Message to Investors: TR Georgia TRGP2 is an agro-industrial company that produces wheat, barley, soya, pomegranate, pistachios and vineyards. TRGP2 is now in the process of installing three important structures: a seeding factory, a feed mill and a cleaning and drying factory.

In the future, the company plans to expand its scope of activity and is planning to build a fertilizer factory, set up greenhouses and a poutlry farm, and meat and dairy producing factories.

TR Company Paliashvili St. 85, 5th floor Tbilisi, Georgia, 0162 Tel: +995 32 2 907 505/905 E-mail: tr@trcompany.ge

102 Invest in Georgia

Hipp entered the Georgian market in 2007 on the initiative of the Managing Director, Mr. Claus Hipp. Since 2005, and prior to the official launch of “Hipp Georgia,� the company carried out intensive research within the Georgian market and studied the possibilities of developing bio-agricultural production in different regions of the country. The director of Hipp Georgia, a Georgian himself, Mr. Archil Zhvania, was appointed from the staff of Hipp in Germany and he himself structured the management of the company. The number of employees currently amounts to 200 people. The present focus of Hipp Georgia is the production of bio and conventional apple concentrate juice.

WHY HIPP INVESTED IN GEORGIA

Mr. Claus Hipp is a great friend and supporter of Georgia. His first association with the country occurred in 1998 and was connected to the field of art. But it was his love of the natural environment, the liberal attitude towards business, a simplified tax system and the simplicity of export / import procedures that were the main incentives for Mr. Hipp when he decided to invest in Georgia.

GEORGIA'S AGRICULTURE SECTOR can embrace import substitution, exports, and productivity gain opportunities

» The next section will introduce you to Georgia’s potential as a Regional Service Hub

104 Invest in Georgia

105 Invest in Georgia

2013

106 Invest in Georgia

A REGIONAL SERVICE HUB

107 Invest in Georgia

2013

REGIONAL SERVICE HUB |

NOW IS THE RIGHT TIME TO INVEST IN GEORGIA One of the highest growing sectors in the world is the service sector and its various pillars. For each region access to financial, consultancy and healthcare services, as well as to shopping centers, is of vital importance. In practice, it is of course impossible to have service centers in every country, which is why establishing regional hubs is the most efficient solution. For this region- which covers the Caucasus, Central Asia and Eastern Europe, as well as a number of other CIS countries -Georgia is the best option for the status of Regional Service Hub from the perspective of its location, attractiveness for FDIs, and readiness.

There is a clear opportunity to position Tbilisi as a financial center covering the Caucasus, Western Asia and Eastern Europe for wholesale banking, regional headquarters, multiservice hub, and capital markets.

The dramatic growth in the number of visitors, and strategic geography, both provide new investment opportunities to transform Georgia into a wholesale/retail regional hub and to establish destination shopping malls in Tbilisi and Batumi. The atmosphere, architecture, music, dĂŠcor, raw materials and unique experiences available offer huge potential in the development of local shopping tourism by providing leisure, food and beverages, retail services and transport.

The vision of the government is to develop a regional healthcare hub in Georgia by leveraging its high traffic for foreign tourists and its existing qualified low-cost physicians. There is also a latent opportunity to transform Georgia into a regional BPO hub serving EU markets.

Explore Opportunities of Georgia as a Regional Service Hub 108 Invest in Georgia

109 Invest in Georgia

2013

• The low-labor cost, deep talent pool, engaged workforce, and expanding career models are key drives to boosting the process of establishing Georgia as a center for EU/global core competencies

110 Invest in Georgia

111 Invest in Georgia

2013

Liberal, De-regulated, Positoned for more...

• The Financial Service Sector has grown by19% since 2009 and is the leading service sub-sector for FDI attraction, accounting for18% of the total inflow in 2012 112 Invest in Georgia

An Investor-friendly economy...

• There is a clear opportunity to position Tbilisi as a financial center for the Caucasus, Western Asia and Eastern Europe 114 Invest in Georgia

115 Invest in Georgia

2013

• Consultancy services attracted 4.3% of the total FDI inflow in 2012

116 Invest in Georgia

Iberia Business Group. The Largest Automotive Holding in Georgia.

The Iberia Business Group is the largest automotive holding in Georgia. IBG imports and sells brand new cars and provides all services related to vehicle exploitation. The holding was established in 1999 and by 2001 had already become a united powerful trade-industrial holding. IBG is an official representative of the following automotive brands: Volkswagen, Audi, Skoda Auto, Mitsubishi Motors, Peugeot, Kia Motors and Renault. All of the showrooms and service centers are situated on David Agmashenebeli Alley where the majority of automotive brand centers are located.

Volkswagen, Audi and Skoda Auto make up part of the Volkswagen Group - a German automobile manufacturing group.

Iberia Business Group is an authorized dealer of Kia Motors in Georgia. The company has operated on the Georgian market since 2008.

Mitsubishi Motors - one of the leading Japanese brands is also a member of IBG Holding. The Holding is an official representative of two French brands: Peugeot and Renault.

IBG also comprises ITA - a spare parts and auto service center.

ITA provides service to vehicles of any brand and is an official representative of successful, world famous companies such as: Mobil, Pirelli, A-mega, Banner, Febi Bilstein, and others.

Iberia Business Group also offers a program called ‘Trade In’ which involves exchanging a used car of any brand while buying a new car and paying only the difference between the prices of the two.

Head Office: 12th Km. David Agmashenebeli Alley.

Tbilisi, Georgia. +995 32 253 21 11 www.ibg.ge

Strategic location, Investor-friendly, Market-oriented...

• Georgia can very quickly become a transaction center primarily for Western European markets, and in a more medium term for the EU and Global Markets 118 Invest in Georgia

The uniqueness of the Dirsi project is that households within the complex will have all comfort in one place. The main principle of architectural design for the residential complex was to select an open space, which is a prerequisite for a healthy living environment. For this purpose, crucial importance was given to a green zone which is three times larger than the required standards. A pedestrian path is specifically planned to be childfriendly and ensures that, from any residential block, pupils will not need to cross a road to get to school. It really provides the highest security guarantees.

In addition, one of the major architectural decisions is that there be a minimum 30 meter distance between each building enabling natural lighting, isolation and ventilation so that everything required for a healthy lifestyle is ensured.

Who we are: Construction company AS Georgia LTD was set up by the Azerbaijani AS Group Investment in 2011. It started to implement a large scale project entitled Dirsi in 2012.

AS Group Investment, =, was established in 2003, uniting several construction enterprises aiming to perform full cycle works: starting from the extraction of raw materials and the production of construction materials to the commissioning of completed construction sites. The company has been developed dynamically throughout its 10 years, maintaining previous projects and thereby implementing the best of modern developments. After researching the Georgian real estate market, the company decided to set up a daughter company and construct the largest residential complex in the South Caucasus.

Residential complex Dirsi includes: 22 buildings with 5,228 renovated apartments; parking space and garages for 4,800 cars; sports facilities; schools; kindergartens; one medical center; shopping centers; and an entertainment park.

Dirsi- a large-scale project located between Cholokashvili Street and the Mtkvari River in Tbilisi -offers clients a beautiful residential area spread over 20 hectares of land. We have been developing the Dirsi concept according to market demand and consumer wishes. To meet the demand of our customers, the apartments come equipped with modern bathrooms, Italian kitchen appliances and central heating systems, with internet, telephone and television cables- a resident need only bring furniture!

The construction is being carried out in two stages and is being implememnted in two phases. The first part of the construction will be finished by the end of 2014 and 11 residential blocks will be put into operation. The whole project with its own infrastructure will be completed in 2016.

Mission The company’s mission is to make available a convenient futuristic building complex to last centuries, while respecting tradition and using the latest technologies. In order to build a life for the future generations, we have tried to establish a new vision and a new attitude towards the environment which helps to ensure health, success and growth of living standards.

Message to Investors: Our goals are to be a leader in the construction market. Offering high quality apartments and facilities to Georgian clients where every resident will live in a comfortable home is our mission and a big ambitious plan. We aim to attract the best employees, and to keep our company as the best place for improvement and self-realization. We continuously work to improve the level of satisfaction of our customers by providing an excellent service of the highest quality.

AS Georgia Between K. Cholokashvili str. & the river Mtkvari, Tbilisi, Georgia Tel.: 995 32 274 04 04 E-mail: info@asgeorgia.ge

119 Invest in Georgia

2013

• The benefits of destination

mega-mall development projects includes a solid retail value proposition, retail brand cluster growth, and a guarantee of prolongued consumer visitsleading to higher purchase potential

120 Invest in Georgia

• Solid infrastructure within the retail and hospitality sector translates into a clear opportunity to position Georgia as a regional retail destination 122 Invest in Georgia

123 Invest in Georgia

2013

• The four service pillars of Georgia include: regional headquarters, wholesale banking, capital markets, and multiservice hub 124 Invest in Georgia

INSTA Main fields of expertise: Engineering & Installation of • Low Voltage • Medium Voltage • Fire Alarm Systems • Building Management Systems & Industrial Automation Solutions • Networks & Telecommunication Systems • Emergency Power Systems & Uninterruptible Power Supply Solutions Insta’s partners are industry-leading companies such as Eaton, Siemens, Jung, Lapp-Kabel, Mennekes, Schneider Electric, Phoenix Contact, TYCO Electronics, and RZB.

Brand and Values Who we are Insta is a major electrical engineering and installations company operating on the Georgian market. It was founded in 1998 at a time when the country was marred by daily power cuts. With the old Soviet systems failing, and cheap products and services of poor quality filling the market, Insta realized that the only way to be successful in the long term, was to invest in prime quality and to thrive in accordance to international norms and engineering standards. Early connections with major German and other European companies, as well as regular training courses for its staff, helped us to cement this approach.

In addition to engineering, consulting and installation services, Insta recently expanded its business by building a modern logistics center and opening several shops in Tbilisi in order to efficiently address the demand for high-quality electrical installation materials, spare parts, cables and the like. Insta also operates a specialized electrical enclosures and switchboard assembly line.

A major convenience is the professional and timely on-site support for finished work, as well as the limited warranty for all sold products.

With rapidly changing markets, staying flexible while maintaining growth is essential when addressing the demands of customers from different industries and backgrounds.

That’s why, for us, our employees are at the heart of our company. They systematically attend training courses and certification procedures organized by our partners, which helps us stay at the cutting-edge of industry developments and ensures total peace of mind to our customers when offering services and products. With a strong team of over 100 professionals, this commitment stays as integral to our company as it was from the very first day we started.

As a result, Insta has become a well-known brand for local industry insiders and the first company to turn to when expertise and quality is required.

Head Office 8 Zakariadze Street , 0177 Tbilisi Tel: +(995 32) 220-20-20 E-mail: sales@insta.ge, info@insta.ge Web: www.insta.ge

126 Invest in Georgia

• Batumi and Tbilisi can offer established tourist destinations, accomodating up to 80% of the foreign tourist traffic in Georgia, and already being accessible through existing international airports, a railway, and a major transportational highway

Constructing, Renovating, Modernizing...

127 Invest in Georgia

2013

• Seaside city Batumi and capital city Tbilisi can be viewed as the locations with the most potential for the construction and development of mega-malls

128 Invest in Georgia

Who we are: Anagi LLC is a construction company offering a full package of project-construction works: construction of residential complexes, hotels, public places, manufacturing and civil buildings, as well as the management of construction projects and project activities including design, decoration and finishing works. We also deal in the production of construction designs and manufacturing including the manufacturing of monolithic concrete, reinforced concrete, metal, carpentry, metal-plastic, aluminum, partition and small wall blocks.

Piazza, Batumi

Hotel Hilton, Batumi

Having been on the market for 24 years, Anagi has won many international and local awards including the 2011 Tbilisi Architecture Service’s Award for Special Contribution in the Reconstruction of Batumi Art Center, and the 2011 Adjara Builders and Developers Association’s Award for the Best Employer Construction Company of the Year.

Currently, Anagi has already completed 77 projects. The company has two factories and 83 machinery units throughout Georgia. At present we have around 10 projects in progress.

Anagi has 156 clients, among them 130 local and 26 foreign.

These include: Marina Coliseum; CBD Development; Toursinvest; Coca Cola; Ministry of Finance of Georgia; National Bureau of Enforcement; Bank of Georgia; Bank of TBC; Cartu bank; Patriarchate of Georgia; Poti Sea Port; Tbilisi International Airport and Tbilisi Development Fund.

Anagi’s advantages are: Accomplishment of all contract terms and conditions on time, perfectly and of high quality; stability, reliability and professionalism; a high level service; an attentive and caring attitude towards the wishes and requirements of clients; experienced and qualified specialists; strong material-technical and manufacturing base equipped with modern machinery; construction using modern technologies; and provision of efficient and diversified services in order to guarantee comfortable conditions for the client.

Tbilisi Office Address: 3, Vazha Pshavela Avenue, Office 9, Tbilisi, 0160, Georgia Tel: 995 (32) 237 94 00; Fax: 995 (32) 237 94 00; E-mail: info@anagi.ge Batumi Office Address: 4

Message to Investors With the 1200 skilled and qualified personnel, including administration, engineering-technical personnel and workers, our company offers clients high-quality service in construction, project design, production of construction materials and construction equipment services. We accept any financing schedule, including financing without any advance payment in case of appropriate guarantees. If the project is financed with advance payment, we issue relevant guarantees, making cooperation with us comfortable and secure.

In addition, the company’s quality assurance and control system is based on ISO 9001:2008 which means that all materials and products used in construction are high-quality and laboratory tested.

Batumi Office Address: 42/5, Vazha Pshavela Street, Office 5, Batumi 6009, Georgia Tel: 995 (422) 27 41 39; Fax: 995 (422) 27 06 12 E-mail: office@anagi.ge Web-site: www.anagi.ge

130 Invest in Georgia

• The FDI inflow in healthcare and social work has increased to 146% since 2007, and accounts for 2.6% of the FDI in 2012

Improving, Equipping, Educating...

131 Invest in Georgia

2013

• Imagine Georgia as a regional healthcare hub- its potential lies in leveraging the high flow of foreign tourists and the existing qualified low-cost physicians 132 Invest in Georgia

Multi-purpose, Multi-functional, Multi-directional...

133 Invest in Georgia

2013

Georgia has latent opportunities which can be capitalized in it becoming a Regional Service Hub and the destination-of-choice for shopping and service centers as well as for financial services and headquarters.

134 Invest in Georgia

135 Invest in Georgia

2013

www.investingeorgia.org

Now is the right time to Invest in Georgia

Explore Georgia’s Potential in: » » » » » »

Hydro Power Regional Logistics Tourism Manufacturing Agriculture Regional Services