Investment Opportunities for German companies: Georgia, Anaklia Port, and SEZ projects


German Chancellor Angela Merkel’s visit to Georgia included important economic componants, including the Economic Forum and the visit of leading German businesspersons. Anaklia Port and City projects are developing intense relationships with various German companies. We spoke to with Keti Bochorishvili, CEO of Anaklia City to find out more.

How you see the opportunities for German companies in Georgia?

First of all, I would like to bring to your attention the fact that Georgia and Germany have a long-lasting history of economic and trade relations, and today Germany is one of the key economic partners of Georgia. German business was among the first to recognize the strategic location of our country in terms of connecting Europe and Asia. Back in the 19th century, the prominent company Siemens developed the cross-continent telegraph line from Europe to India. This was a tremendous project for this period, covering 11,000 kilometers of infrastructure between European capitals and South Asian states. The Siemens company made the decision to use the territory of Georgia part of this project and located their regional office in Tbilisi, underlining Georgia’s role as a natural shortcut between Europe and Asia.

Since re-gaining independence, Georgia has become a home for many German companies. Over the last decade, German business has already invested over EUR 350 million in Georgia. The investments are very diversified in terms of industries: banking, construction, transportation, services, etc. Importantly, many companies from Germany have invested in manufacturing facilities in Georgia like HeidelbergCement, HiPP, Henkel, Caparol and Knauf. In addition, we see the positive tendency that German companies select our country as a platform for regional activities. For example, BASF and BOSCH use Georgia as hub for their regional supply chains.

What sectors do the Anaklia Port and Special Economic Zone (SEZ) target for international and German investments?

The development of Anaklia Deep Sea Port and Anaklia Special Economic Zone will significantly boost the demand for transportation and logistics facilities and value-added services in Georgia to handle the increased transit cargo flows. In the frames of the SEZ, we are developing a modern logistics park powered by fiscal and regulatory incentives as a complementary platform for port activities. This park will be fully integrated with the port and national infrastructure: highways, railway and an international airport located less than 90km from the site.

The second priority sector is the manufacturing industry. Georgia enjoys free market access to the largest consumer markets, with over 2.3 billion consumers: the EU28, EFTA countries, China (Hong Kong from January 2019), and the CIS region including Russia and Turkey. We also have preferential trade arrangements (GSP) with the US, Canada and Japan. Moreover, the Government of Georgia is very active in terms of negotiating new FTAs, among the existing talks are India and the Gulf Region. For the manufacturing sector, Georgia offers competitive advantages in terms of production costs, such as dealing with bureaucracy, a very low tax burden, cheap costs of utilities, competitive cost of skilled labor and quality infrastructure approximated to EU standards in the frames of the Association Agreement. The country is ideally positioned to capitalize on these advantages, serving as production base at the crossroads of Europe and Asia. We and our procured consortium of professional consultancy companies (BuroHappold Engineering and Moffatt & Nichol), which works on the economic demand forecast for our SEZ project, consider this a significant opportunity for development of an export-oriented industrial park. We’ve already prioritized the manufacturing sub-sectors to which Georgia and our SEZ offer an attractive value proposition: automotive spare parts, building materials, FMCG products, cosmetics /beauty products, household chemicals, hygienic products, medicaments and pharmaceuticals, assembly of home appliances and electronics, plastics, and production of solar panels. Overall, the range of opportunities is very broad and almost any manufacturing company can find an opportunity in our emerging region. We already have precedents that companies relocate their production from China to Georgia, to be closer to the market while keeping costs optimized.

In addition, we see huge opportunity for the developers of industrial, logistics and commercial real estate. Within our zone, we intend to introduce the concept of modern logistics and industrial parks, which is common to the European markets but not yet available in Georgia. Therefore, we will create the demand for the German developers and operators of industrial and commercial properties.

With the evolution of the SEZ, there will be number of opportunities in other industries like trading, finance, services, education, etc.

Why do you think the German investors might be interested in the Anaklia Port, City and SEZ project?

Our projects are international. The Anaklia Deep Sea Port will be developed in accordance with European standards. We’ve already signed Mandate Letters with the leading IFIs on provision of debt financing; therefore, all studies were implemented by international companies in accordance with the highest standards, including the environmental and social impact. We also signed a contract with the leading Dutch company Van Oord, which will start the dredging for reclamation works in September. We have the US-based SSA Marine, which operates in 250 locations in the world, as our terminal operator and partner of the project. Anaklia Port will be a state-of-the-art reliable maritime infrastructure with high quality services.

The Anaklia Port will be the first Deep-Sea Port in Georgia able to handle large vessels, significantly cutting the costs and time of transportation to and through Georgia. Coupled with the logistics park within the SEZ, we are creating an integrated transport and logistics platform to improve the market access (inbound/outbound) to the Caucasus, Central Asian states and beyond. German companies will be able to capitalize on the enhanced infrastructure and connectivity for their business activities in the region.

The concept of the SEZ envisages the development of modern logistics and industrial parks with related auxiliary facilities and services. The Anaklia SEZ will have a special regime which includes: fiscal incentives, special statuses for trading, wholesale, transit, bonded activities, manufacturing and many more based on the best practices. We’ll also be bringing in a special legal regime and intend to introduce within the zone international regulations and international dispute resolution solutions based on the rule of law. Therefore, companies could use the Anaklia SEZ as a regional hub for trade, logistics, distribution, production and value-added services while optimizing their regional supply chains. We’ve already initiated our cooperation with the state and donors to develop training centers and professional schools to prepare a pool of skilled workers to meet the demand of the industries to be attracted by our projects.

Finally, our projects will contribute towards the attractiveness and capacity of the Middle Corridor as a competitive alternative to the overland transportation between Europe and Asia.

We have active negotiations with a number of German companies which have business in Georgia or in the region. They’ve extended interest and consider our projects as a future platform for expansion of their regional business. We also have ongoing communication with several companies not presented in Georgia, which may be interested in investing, considering the developments, mainly from the logistics industry.

We are keen to work with the German business community, since we truly believe that our projects will bring many business opportunities for them.

23 August 2018 19:06