Given its strategic location at the intersection of Europe and Asia, Georgia possesses considerable potential to emerge as a crucial transit hub. The country's location between the Black Sea and the Caspian Sea and its proximity to the Caucasus Mountains make it a natural gateway between East and West. Centuries ago, Georgia was a pivotal point along the renowned Silk Road, which connected China and Europe.

Georgia's role as a transit hub gained significant prominence amid the ongoing conflict between Russia and Ukraine. Recently, the "Northern Corridor," which ran through Russia and was considered the most favorable route for connecting China and Europe, has lost its appeal. As a result, interest in the Georgian Corridor, also known as the middle corridor, has doubled. As a result, a sharp rise in cargo flows was recorded in the country last year, and it is presumed that this volume will grow further in the coming years. The government of Georgia intends to invest billions of dollars in the renewal of the necessary infrastructure so that the country can fulfill its geographic and historical role.

The Minister of Infrastructure and Regional Development Irakli Karseladze declares that up to $1.08 billion will be invested in infrastructure development nationwide in 2023. Five thousand six hundred projects will be announced, including the development of highways; the provision of 24-hour clean water supply; the construction and renovation of kindergartens, schools, and sports infrastructure across the country. 

Georgia is currently in the process of executing major projects, such as the construction of a high-speed highway linking the eastern and western extremities of the country. The government's infrastructural development plans are extensive, and as a result, a new hub for investors is expected to emerge through state tenders in the forthcoming years.

Georgia is modernizing its railways, building new highways, and expanding its airports to better connect with other parts of the world. The country's main international airport, Tbilisi International Airport, has seen a significant increase in passenger traffic in recent years, while several smaller airports could potentially be used for cargo or passenger transportation. 

Georgia is already an important transit country for oil and gas pipelines transporting resources from the Caspian Sea region to Europe. The Baku-Tbilisi-Ceyhan (BTC) pipeline and the South Caucasus Pipeline (SCP) run through Georgia, making it a crucial link in the energy supply chain.

The minister urges investors "to act promptly and seize the opportunities presented by Georgia's rapid development". He advises them "not to delay and instead invest as soon as possible to prepare for the imminent growth. Various prospects are available, and a quick jump over can be expected in the upcoming years".

The Roads Department of Georgia oversees 1455 km of international roads and 6943 km of secondary roads. The department's chairperson, Giorgi Tsereteli, highlights that the most significant project under its supervision is the East-West Highway, Rikoti Section, which involves the construction of 97 bridges and 51 tunnels. "Georgia is positioned as a transit hub, and fulfilling this role requires proper road connections", he says. 

The Black Sea ports play a vital role in Georgia's logistics infrastructure. Last year, there was a notable 20% increase in sea shipments. Given the escalating demand, the government is actively exploring the possibility of constructing the Anaklia deep-sea-water port. The state will hold majority ownership of 51% in the country's largest port and is currently seeking a 49% share-owner. The project holds significant regional importance, making it an attractive opportunity for international investors.

"The deep-sea-water port of Anaklia will allow us to receive large ships. Our goal is for the port to start operating in 2026. The government's involvement in the project will create special conditions for interested investors", says David Javakhadze, Director of Anaklia Deep Sea Port Development Agency. 

Poti Port is the largest seaport in Georgia, handling liquids, dry bulk, and 80% of Georgia's container traffic. Since purchasing the port in 2011, APM Terminals has invested over 130 million. "The significance of the middle corridor is increasing rapidly, and Georgia's location is ideal in this regard. There is a strong expectation that cargo turnover will continue to increase in the upcoming years. Therefore, modernization of the port infrastructure is underway to double the capacity of Poti port", explains Julián Fernández, Managing Director at APM Terminals Poti, Georgia.

Railway serves as a strong link between sea infrastructure and land transportation. Last year, the state-owned enterprise Georgian Railway handled 14.7 million tons of cargo. The company can transport up to 27 million tonnes of freight annually. However, this number is expected to increase to 48 million tonnes by the end of 2024 after the completion of its modernization project. "In 2022, Georgian Railways observed a remarkable increase of 22% in the volume of transported goods. Given the current geopolitical situation in the region, there is a strong expectation for the cargo volume to continue growing substantially. Aiming to increase Georgia's competitiveness, the modernization project is planned to be completed as soon as possible", says David Peradze, General Director of Georgian Railway.

The Baku-Tbilisi-Kars (BTK) railway project is another critical regional initiative that enables transporting passengers and goods between Azerbaijan, Turkey and Georgia. BTK will become fully operational by next year, with 87% of the project already completed. Once operational, the route will have a total capacity of 5 million tonnes of cargo, significantly contributing to the region's transportation infrastructure.

The private sector has confirmed the significant increase in Georgia's transport and logistics load. Gianti Logistics, a company that transports various types of cargo, has identified Central Asian and Caucasian countries as their primary focus. The company's CEO, Giorgi Makhatadze, suggested that investors from the UAE could establish branches in Georgia to facilitate exports to Central Asian countries, given the vast transit potential in the region.

Georgia's role as a logistics and transit hub is on the rise, and several large-scale infrastructure projects are underway in the country, with some just commencing.

‍

Free trade zones: the center of tax attraction for production in Georgia

Georgia's Free Industrial Zones are boosting economic growth and attracting foreign direct investment

To attract foreign investment, boost exports, and promote economic growth, the Georgian government has established Free Industrial Zones (FIZs). These zones, which are now privately owned, provide various benefits to investors, such as tax incentives, simplified customs procedures, and streamlined regulations. Investors producing goods for export in these zones are exempt from VAT and property tax. They also benefit from simplified customs procedures and taxes on imported equipment, machinery, and raw materials.

Poti Free Industrial Zone is the oldest and largest free zone in Georgia and covers an area of 300 hectares. The particular zone specializes in manufacturing, logistics, and trading activities. "We provide our investors cost-effective business set-up packages, a range of licenses and modern facilities as well as first-class handling and support services", says Tamar Sakheishvili, Chief Investment Officer of Poti FIZ. 

The Tbilisi Free Industrial Zone, located in the capital city of Tbilisi, covers an area of 135 hectares and has direct access to the main cargo transportation highway, Tbilisi International Airport, and the city center. The zone specializes in manufacturing, services, and logistics. "Free Industrial Zones are particularly attractive for Central Asian countries. Georgia is the shortest route to Europe, and the tax benefits offered by the country create additional opportunities for investors," says Soso Nibladze, Managing Partner of Tbilisi Free Zone. 

The Hualing Free Industrial Zone, another FIZ situated in Kutaisi, covers an area of 110 hectares and is home to several Chinese companies engaged in manufacturing, trade, and logistics activities.

The establishment of FIZs in Georgia has played a crucial role in attracting foreign investment and boosting its economic growth. These zones have become essential regional trade and commerce hubs, helping Georgia diversify its economy.

‍

Connecting the country: Georgia's strategic aviation hub

‍Georgia's aviation sector is rapidly expanding, with the country emerging as a regional strategic hub

With three international and five domestic airports, Georgia is investing heavily in expanding its airport infrastructure to enhance connectivity and improve cargo infrastructure.

TAV Georgia, a subsidiary of TAV Airports and a member of group ADP, has invested $220 million in the construction and expansion of passenger terminals at Tbilisi and Batumi International Airports, and plans to invest an additional $9 million on internal infrastructural works and equipment renewal in 2023.

According to Tea Zakaradze, General Manager at TAV Georgia, the company is focused on developing the infrastructure of its airports in order to offer top-quality services to travelers. The airport currently hosts 45 airlines and is expected to welcome 3.7 million passengers in 2023. Batumi International Airport was extended with a new arrival terminal in 2021. It aims to host 750,000 passengers this year and to double its capacity in the near future.

In addition to passenger flights, cargo operations are also growing in Georgia. New Georgian cargo airlines such as CAMEX and Geosky are emerging, and TAV Georgia is working to improve its cargo infrastructure at Tbilisi International Airport.

Irakli Karkashadze, Director at United Airports of Georgia, which manages three airports, believes that attracting more airlines is crucial for the country's economic development. Kutaisi International Airport, built in 2012 to serve low-cost airlines such as Wizz Air, is being expanded with a new 3.5-kilometer runway to accommodate all passenger and cargo aircrafts. The airport plans to open a business lounge and is investing $17.87 million in infrastructure.

United Airports of Georgia also manages Mestia Airport, one of Europe's top 5 highest airports. Demand is growing, and the airport is looking for expansion opportunities. 

As Irakli Karkashadze says, "More direct flights mean more tourists, which is one of the main contributors to the development of our country's economy." Georgia is eager to welcome more airlines and travelers alike, and its airports are poised to meet the needs of its growing economy.

‍

‍