Sprawling vineyards, stunning churches and dramatic mountains – this is Georgia at its best. Yet what makes the country so special for a growing number of tourists are its warm and welcoming people. Known as the birthplace of wine, the nation’s legendary hospitality is reason enough to raise a toast. Channeling this spirit of positivity and openness as part of its growth strategy can help Georgia attract more foreign investors and accelerate recovery in a post-COVID world.
Attracting foreign direct investment (FDI) allows economies like Georgia to connect to global value chains, create jobs, boost exports, and encourage new technologies and business practices. However, since 2017, the country’s FDI inflows have not increased significantly. Moreover, considering the COVID-19, and like in many other countries in 2020, it has halved compared to the previous year. In this context, it is vital for Georgia to capitalize on the investment rebound, especially with the economic impacts of a global pandemic.
In response, the Investment Promotion Strategy and Action Plan, developed by Enterprise Georgia-Invest in Georgia, with support from IFC, couldn’t be more timely. Through an ongoing advisory project, implemented in partnership with the Swiss State Secretariat for Economic Affairs SECO, IFC worked with the government and took a targeted approach to help Georgia attract and retain IDEs.
“The plan outlines a series of targeted policy reforms to better synchronize the country’s investment strategy with the specific requirements of export-oriented and efficiency-seeking FDI, which can be an important driver of diversification and sophistication. economies,” said IFC Regional Director Ivana Fernandes Duarte. for the South Caucasus.
The results are already there with the first investment, likely to be followed by many others. Concentrix, one of the world’s leading providers of customer experience and digital solutions, recently announced its entry into Georgia. As the company brings in substantial business from top brands, it is expected to create employment opportunities in the country.
Explaining why they decided to open their new office in Georgia, Paweł Puła, Site Manager for Concentrix, said, “We were looking for a strategically located location for optimal language support for our multilingual customers with a rich talent pool, although – After talking to the Georgian government, we quickly realized the country’s great potential, with a workforce of 1.9 million, a flexible business, reliable network connectivity and a growing service sector , Georgia ticked all the boxes.
Pula added, “We look forward to welcoming passionate and talented new people in Georgia to the Concentrix family over the coming months.”
Mikheil Khidureli, CEO of Enterprise Georgia-Invest in Georgia, noted that attracting global players to the Georgian market is a cornerstone of the agency’s strategy and that IFC has been instrumental in supporting this. direction of the agency’s operations. “Over the past two years, with the support of IFC, we have taken a more focused and dynamic approach to attracting FDI. We are already seeing results from these activities, including the entry of such a large company as Concentrix.”
Tornike Zirakishvili, deputy director of the state agency “Enterprise Georgia – Invest in Georgia” and Paweł Puła, site manager of Concentrix, at the ceremony celebrating the entry of Concentrix into Georgia. Photo by: Irakli Chelidze
The action plan was preceded by a lot of work. IFC has developed a methodology to analyze and research up to 40 sectors before focusing on priority sectors, including hospitality, tourism infrastructure, business process outsourcing (BPO), apparel and footwear, electronic equipment components and automotive and aerospace components. In addition, IFC reviewed the country’s national capacity and interviewed relevant stakeholders to assess potential investment scenarios.
Later in 2020, IFC updated its sector analysis with a COVID-19 filter and the global value chain. As a result, the importance of contract research organizations, agro-industry and integrated automotive components in the Turkish automotive supply chain has been further enhanced. In addition, attracting BPO was reconfirmed as a priority, given that BPO activity can also boost the competitiveness of verticals that BPO operations support.
Although it is too early to measure the full impact of the program, a direct outreach program developed with IFC support and implemented by Enterprise Georgia attracted initial interest from 20 investors in target sectors over the course of of the last financial year 2021 (ending in June 2021) – three are in their final decision-making stages.
The underlying objective of IFC’s work under this project continues to be investment generation, follow-up and reinvestment, which can often be an important source of new FDI. Additionally, aftercare services, which help foreign investors adjust to a new economic environment – particularly relevant during the pandemic – are a key mechanism used globally to help create jobs and raise levels. of reinvestment.
Given the follow-up efforts, one of the largest BPO companies, Majorel, decided to open its fourth and fifth offices in Batumi and Tbilisi. In another example, one of the biggest investors in terms of employment, Adjara Textile, decided to open another manufacturing plant in Rustavi, creating an additional 2,500 to 3,000 jobs. While supporting investors in their decisions to reinvest in BPO and the apparel sector, the agency is also helping Swiss chocolatier Camille Bloch invest in hazelnut growing and processing in Georgia.
The project has further identified an investor-targeting database of 660 companies in key sectors, which will be crucial in helping the agency identify new prospects. Additionally, with an increase in biopharmaceutical investment during the pandemic, UNCTAD’s World Investment Report 2020 noted that pharmaceutical investment in 2019 doubled from the previous year. This can help attract high-profile pharmaceutical and biopharmaceutical investors. In this context, Georgia’s duty-free access to both the European Union and China can form the basis of a unique selling proposition.
Meanwhile, Concentrix has already started recruiting, creating job opportunities for Georgians who want to work in an international company.
As the new roadmap helps the country gradually attract more FDI, it’s time for Georgia to get ready to play its usual gracious host.
Published in January 2022