WHY GEORGIA
Strategically located linking Europe with Asia, apparel, footwear and bags manufacturing companies in Georgia find that the combination of tariff-free access to the major markets with low overheads enhance cost efficiencies, while skilled and inexpensive labor pool and exceptional business environment sustains competitiveness
Proximity to strategic markets andopportunity to reduce lead time
Contract manufacturing is well developed in Georgia
7th Easiest Country to do Business(World Bank’s Ease of Doing Business Report 2020)
3rd Least Tax Burden Country, with 9.9% Total Tax Rate(World Bank Group)
Experienced, productive andcompetitively priced labor force
Free Trade Agreements with 2.3 Billion Market (Including EU, EFTA, CIS and China)
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR2
GEORGIA
THE COUNTRY AT A GLANCE
Region: EuropePopulation: 3.7 MillionCapital: Tbilisi Government type: Parliamentary systemGDP Per Capita (2019): USD 4763.5Inflation (2019): 4.9% Currency: Georgian Lari
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 3
Poti
Batumi
Armenia Azerbaijan
Russian Federation
Turkey
Upcoming Anaklia port
1 FIZ
2 FIZ1 FIZ
Kutaisi
Tbilisi
The Black Sea
Share of Reinvestments (2015-2019 average)
28.5%
FDI to GDP Ratio(2015-2019 average)
9.78%17.7 bln USD
GDP in 2019 Real GDP Growth Rate (2015-2019 average)
4.1 %FDI Over Last 5 Years
(2015-2019)
7.9 bln USD
Source: Geostat
Free Industrial Zones
International Airports
Main RoadsRailway
FIZ
Ports
GEORGIASTANDING OUT
OECD FDI Regulatory Restrictiveness Index 2019
Georgia Ranks 4th in the Eastern Europe and Central Asia Region
8th
TRACE Matrix 2019Interaction: Contact with
government
Georgia Ranks 27th in overall standings out of 200 countries
1st
Safety Index 2020
Georgia Ranks 1st in Europe in Safety index
4th
Georgia has the Association Agreement, DCFTA and
Visa-free regime with European Union
“Deep reforms in economic management and governance have earned Georgia a reputation as star reformer” - World Bank Group Georgia
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR4
Index of Economic Freedom 2020
Georgia Ranks 7th and 11th in Trade Freedom and Business Freedom
Respectively
12th
WJP Rule of Law Index 2020
Eastern Europe & Central Asia Region
Georgia Ranks 7th in the group of Upper Middle Income counties and
42nd in overall ranking
1st
SECTOROVERVIEW
Contract manufacturing of apparel is well developed in Georgia. Footwear and bags manufacturing sector has emerged recently as local manufacturers started to export their products to different international markets
Most of the companies are located in western Georgia, another cluster being in Tbilisi
Leather production is also developing in Georgia and currently Georgian leather is exported to Italy and Turkey
10 large foreign investors and 13 Georgian companies
Key processes: Cut, Make, Trim (CMT), made to order, boutique and high-end fashion
R U SSI A Existing clusters
B L AC KS E A
Anaklia Poti
Batumi
Zugdidi
Samtredia
Kutaisi
Mestia
Ozurgeti
Fast Growing cluster locations
Main Roads
TU R K E Y
AZ ERBAIJANARMMENIA
TBILISI
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 5
INTERNATIONAL BRANDS PRODUCED IN GEORGIAExisting factories produce apparel for famous international brands, such as Moncler, Nike, Adidas, Mexx, Zara, Puma, Autograph, Lebek, Hawes & Curtis, M&S, H&M, etc along with production for local market of work and specialized garments
‘Georgia is the best place in terms of reliable tax policy. Georgia also offers suitable labor costs, low energy costs
and preferential access to the EU market, all of which create a fertile environment for production’
Source: Ajara Textile
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR6
EXPORT ANDPRODUCTION
89 86 80 86 82 107
56 57 56 68 80
-
50
100
150
2014 2015 2016 2017 2018 2019
Apparel, mln USD
Export Production
4.0
2.1 2.1 1.4
2.2
4.63.2 2.9 2.7 2.8 2.5
-
2.0
4.0
6.0
2014 2015 2016 2017 2018 2019
Footwear, mln USD
Export Production
1.7 1.3 0.6 0.8 0.6 0.8
7 7 4.8
3.3 2.4
-
5.0
10.0
2014 2015 2016 2017 2018 2019
Bags and accessories, mln USD
Export Production
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 7
YOUNG, SKILLED AND INEXPENSIVE LABOR POOLAverage Monthly Salary in Manufacturing(including social security)
EGY UKR GEO MAR SRB TUR ROU HUN
208$ 221$ 227$ 397$ 400$ 449$ 572$ 635$
YOUNG LABOR FORCE
Unemployment rate is 12.3% and half of the unemployed population is in the 20-45 age group
LABOR PRODUCTIVITYProductivity is forecasted to
grow at 4.7% annually (ILOSTAT)
FLEXIBLE REGULATIONSThe country doesn’t have minimum wage
regulations and compensation depends on the agreement between employee and employer
Source: fDi Benchmark from the Financial Times Ltd 2020
FAVORABLE LABOR CODEAccording to Heritage Foundation,
Georgia ranks 22nd globally on Labor Freedom Index
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR8
ACCESS TO FRESH TALENT POOLVET Schools
BREAKDOWN OF VET GRADUATES BY FACULTIES, 2019
12 State-owned Vocational Educational Institutions providing professional courses in cutting, sewing, shoemaking and other practical subjects used in the industry
Most of the fees for courses are financed by the Government, and in case of investor’s request, customized training is available for new factories
Agricultural Sciences15.60%
Business Administration
16.50%
Engineering28.60%
Interdisciplinary Programs
10.30%
Art7.80%
Healthcare
Source: Geostat, 2020
15.70%
Other5.50%
Literacy Rate99.4 %
Population with Secondary Education
92 %
64 HEIs and 66 VETs
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 9
YOUR NEARSHORINGDESTINATION
Well Connected Location at the Heart Of Eurasia
Simple and service-oriented customs policy and administration
80% of goods free from import tariff
Member of Middle Corridor and TRACECA
Connected to the EU’s Trans-European Transport Networks
EU - DCFTA
EFTA - FTA
CIS - FTA
Turkey - FTA
Ukraine – FTA
China (incl. Hong Kong) -FTA
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR10
FREE TRADE AGREEMENTS WITH 2.3 BLN MARKET
Spain
Russia
Kazakhstan
Iran
Turkey China3 Days by Train 5 Days 8 Days
6 Days 4 Days 2 Days by Truck3 Days 2 Days 1 Day by Plane
France
German
y
LARGE INVESTORS IN GEORGIA
Ajara TextileProduction range: sports & leisure wear, shorts, t-shirts
End buyers: Puma, Adidas, Nike
Number of employees: 3500
Parent Company: Milteks Group
Fast Track TextileProduction range: Sports & leisure wear
End buyers: VF Corporation
Number of employees: 500
Parent Company: Imteks
Georgian Textile Production range: Sports & leisure wear
End buyers: Mavi, Colin's, Primark
Number of employees: 400
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 11
LARGEGEORGIAN FACTORIES
ELSELEMAProduction range: uniforms/work wear, water proof clothing (Gore-Tex), caps, cloaks, winter clothes and knitwear for men, women and childrenEnd buyers: Moncler, Damat TweenNumber of employees: 100
MOVIProduction range: jackets and trousers for women, men and children End buyers: Equiline, Dainese, Silusi, Iceberg, IL Gufo, Designer ArtworksNumber of employees: 300
MPT GeorgiaProduction range: dresses, t-shirts, pants, skirts, blouses, jumpsuits, etc. End buyers : B.young, ICHI, Cream, Saint Tropez, In Wear, Fransa, Kaffe, Bon A parte Number of employees: 100Certificates: BSCI, Level A
ImeriProduction range: coats, skirts, blazers, shirts, short coats, trousersEnd buyers: Lebek, MonclerNumber of employees: 400WRAP-gold certificate of compliance
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR12
COMPETITIVEUTILITY COSTS
Electricity (per kWh)
EGYGEO MARTUR HUN
6.4¢ 6.6¢ 9.2¢ 9.7¢ 10.7¢ 12.4¢8.9¢ 18¢
UKR ROU SRB
Industrial Gas (per c/m)
EGY GEO MARTUR HUN
32.9¢23¢ 32.8¢18¢ 39.9¢37.3¢23.9¢ 37.8¢
UKRROU SRB
EGYGEO MARTUR HUN
57.9¢8.5¢ 104¢9.9¢ 59.2¢ 66.1¢63.7¢ 94¢
UKR ROUSRB
Water (per c/m)
*all utility costs are given in USD Cents Source: fDi Benchmark from the Financial Times Ltd 2020
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 13
INDUSTRIALAND WAREHOUSE SPACE
The total volume of industrial and logistics space in Georgia amounts to approximately 2.5 million sq. m., most of the properties located in Tbilisi, Kutaisi, Rustavi, Batumi and Poti
The weighted average rent for dry storages varies between USD 2-3 per sq. m.
Four Free Industrial Zones operate in three Georgian cities: the Tbilisi Free Industrial Zone, the Kutaisi Free Industrial Zone, the Hualing Free Industrial Zone (in Kutaisi), and the Poti Free Industrial Zone
Free Industrial Zones provide land plots and/or industrial properties that can be leased for up to 50 years
Construction cost per sq. m. of White Frame
Sandwich - Panel Construction USD 263 net of VAT
Reinforced Concrete Construction USD 143 net of VAT
Metal Construction USD 68 net of VAT
Source: Colliers International Georgia
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR14
BENEFIT FROM THE MOST ATTRACTIVE TAX SYSTEM
0% Tax on Retained Profit
Pension contribution* – 2% paid by Employer, 2% paid by Employee
Personal Income taxes for interest, dividends and royalties are just 5%
Double Taxation avoidance Treaties with 56 countries
*up to 2% paid by Government until savings reach 60,000 GEL
0% or 15 %Corporate Profit Tax
20 %Personal Income Tax
18 %Value Added Tax
Select ItemsExcise Tax
0%, 5%, or 12%Import Tax (depending ongoods imported)
<1%Property Tax
4Free Industrial ZonesAll located in strategic locations
3rd Least Tax Burden Country in the World by Total Tax Rate (% of profit)
Taxation System
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 15
SPEND LESS TIME ON PAPERWORKGeorgia Ranks 7th in Ease of Doing Business Ranking, Here's Why:
Starting a Business
Registering a Property
Getting Construction Permit
Getting Electricity
Number of Tax Payments (per year)
Time to Export (Border compliance)
Georgia OECD High Income - Average
1 Day 9.2 Days
5 10.3
6 Hours 12 Hours
Source: World Bank, Ease of Doing Business 2020
1 Day
63 Days
23.6 Days
152.3 Days
71 Days 74.8 Days
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR16
Great Location State Support Program – “Produce in Georgia”
Tbilisi (capital city)
Poti (sea port)
Kutaisi
FREE INDUSTRIAL ZONES INCENTIVES
Free Land & Building for a FactoryThe state owned property can be transferred to investor for free of charge for the manufacturing project (with certain investment obligations)
Subsidies for Loan Interest Payment The program co-finances bank loan interest rate for the first 36 months for hotels and manufacturing projects - currently 11% co-financing
Loan amount should be in the range of GEL 50,000 – 10,000,000
Collateral Guarantee Co-financing Within the program, a security is provided for up to 90% of the principal amount for each loan disbursed by commer-cial bank (hotels and manufacturing projects)
Loan amount should be in the range of GEL 50,000 – 5,000,000
The maximum loan warranty period is 10 years
Special Tax RegimeExemption from all taxes except Personal Income Tax (20%), which is paid from employees’ salaries (goods produced for export)
In case of import, the company has to pay VAT and 4% of revenue from national sales
Simplified Procedures
Available Facilities
WE ARE HERE TOSUPPORT YOUR BUSINESS
GEORGIA - A PLEASURE DOING BUSINESSAPPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR 17
BUSINESS DEVELOPMENT
EXPORT SUPPORT
INVESTMENT ATTRACTION
Aftercare
o Support in further expansiono Constant feedback
o General statistics and data about business-operating costs
o Sector researches
Informationi
Communication
o Access to Government at all levelso Connection to local partners
(consulting, education, real estate)
Facilitation
o Assistance in location selectiono Organization of site visits
ENTERPRISE GEORGIA“Enterprise Georgia” is an economic development agency under the Ministry of Economy and Sustainable DevelopmentThe Investment Division of the agency serves as a “One-stop-shop” for investors to support companies before, during & after investment process
GEORGIA - A PLEASURE DOING BUSINESS APPAREL, FOOTWEAR AND BAGS MANUFACTURING SECTOR18
18 Uznadze str. 0102 Tbilisi, GeorgiaTel: (+995 32) 2 960 010E-mail: [email protected]
i n v e s t i n g e o r g i a . o r g
CONTACT INFORMATION