Page 24 - GEORptSep19

FDI in Georgia shrinks 35% y/y in 2018 but remains robust at 7.5% of GDP
Breaking down the data on Q1 of this year, the Georgian Tourism Development Fund—owned, according to BPN.ge by Ivanishvili—was ranked by the statistics office as among the 10 largest foreign investors. The company is located at the address of Ivanishvili’s Cartu Foundation. It is solely in the ownership of Panama-based Frankston International, which BPN.ge reported is also owned by Ivanishvili. The company was established on November 3, 2014.
Tourism Development Fund was on the 2018 list of the top 10 FDI investors in Georgia in 2018 as well, with $76mn (6% of the year's total FDI) invested.
According to preliminary data from Geostat, the volume of FDI in Georgia amounted to $286.1mn in the first quarter of 2019, 6.3% y/y down.
Ireland was the country's largest direct investor country. This is explained by Irish company Paddy Power Betfair (PPB) purchasing 51% in the largest player in Georgia’s gambling market, Adjarabet, for GBP101mn in February this year.
The company has said that through agreed option arrangements it expected to acquire the remaining 49% of Adjarabet after three years. Adjarabet is licensed to offer a range of online betting and gaming products in Georgia including casino, sports, poker and peer-to-peer games. It takes an estimated 40% share of total online gambling revenues in Georgia.
Gross foreign direct investments in Georgia decreased by 6.35 y/y to $281mn in the quarter, but equity investments increased by 28% y/y to $159mn. Re-invested earnings were smaller in the quarter, dragging down the headline FDI figure.
Foreign direct investment (FDI) in Georgia reached $1.26bn in 2018. The figure was issued by officials after a slight upward revision from the $1.23bn estimated in March. It marks a substantial 35.5% decrease compared to the previous year. The data was announced by the National Statistics Office of Georgia, Geostat, on August 15.
Despite the drop in investment, the FDI-to-GDP ratio remained robust at some 7.5% in 2018.
The main reasons for the decline in FDI included the completion of a pipeline project, the transferring of the ownership in some companies from non-resident to resident units and a reduction in liabilities to non-resident direct investors, Geostat observed.
The financial sector received the largest share of FDI in 2018 – $270.7mn. It was followed by construction – $173mn; transport – $163mn; manufacturing – $140mn; real estate – $131.4mn; the energy sector – $120.8mn; hotels and restaurants – $77.8mn; mining – $62.2mn; and other sectors – $126.3mn.
In 2018, most FDI came from Azerbaijan – $246.4mn. Amounts of $208.4mn, $178.8mn and $102.6mn came from companies registered in the Netherlands, UK, and US, respectively. The next best ranked were China – $75.7mn; Czech Republic – $75mn; Panama – $74.6mn; Russia – $69.7mn; Luxemburg – $50.1mn; Turkey – $49.6mn; and other countries – $134.3mn.
24 GEORGIA Country Report September 2019 www.intellinews.com