G E O R G I A G E O R G I A Ministry Of Economic Development Of Georgia 2005
Georgian Trade 1994-2004 (ml USD)turnover export import balance
1994 420 150 270 -120
1995 540 150 390 -240
1996 880 200 680 - 480
1997 1180 240 940 - 700
1998 1070 190 880 - 690
1999 730 240 490 - 250
2000 1030 330 700 - 370
2001 1000 320 680 - 360
2002 1040 320 720 - 400
2003 1500 320 1180 - 860
2004 2500 650 1850 - 1200
FOREIGN TRADEFOREIGN TRADE($USD millions)($USD millions)
0200400
600800
10001200
14001600
18002000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
ExportImport
TOP TEN TRADING PARTNERSTOP TEN TRADING PARTNERS20020044
($US millions)($US millions)
0
50
100
150
200
250
300
350
400
Turnover Exports Imports
FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENT
050
100150200250
300350400
450500
1997 1998 1999 2000 2001 2002 2003 2004
FDI (USDmillions)
Peaks in 1997-98 and 2003-04 are connected to construction of pipelinesPeaks in 1997-98 and 2003-04 are connected to construction of pipelines
INCENTIVES INCENTIVES
• WTO membership – MFN trade regimes with 146 countries;
• CIS Free Trade Zone – Free access of CIS market;
• GSP – European Union, Switzerland, Turkey, Canada, USA and Japan
• Liberal tax regime - Lowest rates in the region
• Fiscal Support for Exporters – Quick VAT refund scheme for exporters. Duty and tax callback regime for goods imported for re-export
• Favorable transport location – Access to Europe, CIS and Asia markets. Rail, Road, Sea, Air connections
• Rapid reform process – Governments commitment to reforms Improving business and service environment, Governments support for FDI attraction
Guiding Principles of Economic Reforms
• Liberalization
• Deregulation
• Private sector as a driving force of economic development
• Broad based economic growth as a major instrument for fight against poverty
Reform of Licensing systemReform of Licensing system
• Reduced number of activities subject to licenses and Reduced number of activities subject to licenses and permitspermits
• Simplified licensing proceduresSimplified licensing procedures• Reduction number of required licenses and permits Reduction number of required licenses and permits
from 909 to 159from 909 to 159• Reduction number of controlling agenciesReduction number of controlling agencies• Possibility to transfer ownership of use licensesPossibility to transfer ownership of use licenses
Tax ReformTax Reform
New Tax Code from January 2005– 7 taxes instead of previous 21 (income, profit,
social, property, excise taxes, VAT, tax on gambling business)
– Reduced tax rates: VAT 18% instead of 20% (from July 1st
2005)Income tax 12% flat instead of 12-20%
proportionalSocial tax 20% instead of 33%
– the possibility of 100% amortization in the year if investment
– a quick mechanism of VAT refund for exporters within a month.
Trade Duties
• From January 2005 16 import tax rates instead of 22 before;
• Import tax rates fall in 0%-30% range• There are no quantitative restrictions on imports • A limited number of licenses and permits on
exports and imports (now only 8)• Export and re-export is free from custom duties • Export is free from VAT
New GSP+ Scheme of EU
• New GSP+ scheme works from July 1st 2005 until 2008
• New Scheme envisages additional preferences for sustainable development and good governance
• 7200 products will enter EU market with Duty free access
• Georgia is only a beneficiary country among CIS countries
Liberalization of Transportation
- reduction in number of licenses and permits in transportation sector from 15 to 5
- Air transport - liberalization of tariffs, flight frequency and capacity, number of carriers and destinations
- Road transport – elimination of transport duties, different transportation barriers
- Sea transport – extension of main Trans-European Transport Axis to Georgia
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