Enterprise Georgia on Georgia’s Manufacturing Potential

Enterprise Georgia has conducted an analysis of export-oriented production to reveal those products with high investment potential within the Deep and Comprehensive Free Trade Agreement (DFCTA). International consulting company KPMG conducted a detailed analysis of the market, and identified the shoes, bags and accessories industries as investment opportunities.

KPMG prepared three investment proposals, specifically in the directions of leather and sports shoes and travel bags. The investment offer includes a financial model for enterprises producing between 6 to 8 million units per year. Pre-selected state lands can be used to build given enterprises for potential investors.

The study revealed the main advantages that Georgia has to offer investors. The first being access to potential markets without customs. Import taxes on bags and shoes amount to 17-30%, and with goods originating from Georgia, the product will be able to take advantage of the zero tariffs according to the Free Trade Agreement.

The second factor is competitive expenses related to business operation. The average accrued salary for bag producers amounts to $290 and for bags $450. The cost of electric power per kilowatt is about $6-8 for industrial consumption. Additionally, in case of reinvestment, profit tax in Georgia is 0%. Salary is taxed by a fixed income tax of 20%. Thus, producers have the opportunity to benefit from the tax privileges established in the free industrial zone. Finally, potential investors have the opportunity to cooperate with the Partnership Fund, through which investors can benefit from both infrastructural and financial support.

By Anna Zhvania