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Investment policy

Launch of the OECD Investment Policy Review of Georgia

 

Paris, France, and Tbilisi, Georgia, 15/12/2020 - The OECD and the Government of Georgia today launch the results of an 18-month project to assess the investment climate in Georgia, with the support of the European Union as part of its EU4Business initiative.

Georgia is now, like much of the world, facing the unprecedented health and economic consequences of the COVID-19 pandemic. The government rapidly adopted monetary and fiscal measures to support healthcare provision and liquidity, and to assist at-risk firms and individuals. The pandemic’s impact on business, travel, remittances and investment are nonetheless likely to have a severe impact on the economy. Together with public investments, private investment, both foreign and domestic, will be essential for Georgia’s economic recovery.

The Review assesses Georgia as one of the most open economies to foreign investment and commends government reform efforts. Successive reforms over the past three decades have helped improve the legal framework for investment. Core investment legislation establishes a level playing field between foreign and domestic investors and provides a clear and predictable framework for property rights. Well-developed laws and institutions on data protection and cybersecurity are also noteworthy.

Further reforms will need to address gaps in infrastructure and connectivity within the country, and upgrade the skills of the workforce. Improving not only regulatory settings but also the whole investment climate will help Georgia attract FDI that can have a positive impact on productivity and inclusive, sustainable growth.

A number of important challenges remain. Efforts are needed to continue reinforcing the independence, accountability and capacity of the judiciary to build investor confidence in the court system. Other important challenges include ensuring that intellectual property rights are enforced effectively, continuing to realise universal land registration and continuing to improve the legal and institutional infrastructure for alternative dispute resolution services.

The Review also includes specific thematic analyses and recommendations to:

  • Attract investment in Georgia’s agricultural and food value chain, which collectively accounts for 10% of GDP and 44% of employment. Investment in agri-food value chains can help enhance productivity growth, bolster incomes, improve food security, support rural development, and maintain competitiveness in international markets. Georgia has strong potential to attract FDI in the sector, but boosting exports of high-value food products will require addressing a unique set of challenges for investors. Most food products are predominantly grown by small-scale family holdings, which are often subsistence-oriented and with surplus production frequently sold on local markets. The farm structure is also highly fragmented. Addressing these structural deficiencies is essential to promote investment and generate new growth opportunities for the sector.
  • Ensure that investments are targeted strategically for Georgia’s sustainable development. This requires a coherent investment promotion and facilitation strategy and suitable institutional architecture. A comprehensive investment policy statement would help align all actors behind a joint vision and foster synergies between investment, exports, and enterprise and innovation promotion. 
  • Promote and enable responsible business conduct (RBC), to ensure that business activity contributes to broader value creation and sustainable development. In recent years, Georgia has made significant strides to establish a regulatory and institutional framework that underpins and promotes RBC. The implementation of the EU Association and Partnership Agreements and the development of the National Human Rights Strategy are important opportunities to consolidate existing efforts and promote RBC principles and standards. Labour protection has been reformed and strengthened, including occupational health and safety and the re-establishment of labour inspection.

The OECD Investment Policy Review of Georgia provides Georgia with a systematic approach to investment climate reforms by using the OECD Policy Framework for Investment’s well-tested methodology. The OECD carried out the Review in close co-ordination with an inter-ministerial task force led by the Ministry of Economy and Sustainable Development and established to discuss the Review in a whole-of-government approach. The Review has benefited from a peer review of the OECD Investment Committee and numerous stakeholder consultations.

 

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CONTACT:

Daniel Quadbeck (Daniel.QUADBECK@oecd.org), Senior Policy Analyst, OECD Global Relations Secretariat

Stephen Thomsen (Stephen.THOMSEN@oecd.org), Head of OECD Investment Policy Reviews

 

 

 

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