It is projected that the CIS region would only experience economic growth of only 1.9% in 2019 and 2.1% in 2020. Cooler dynamics in regional giant Russia are expected to drive the slowdown in 2019, with the cooling also impacts several economies in the region where Russia is a major trading partner. In addition, the evolution of commodity prices is clouding the regional outlook with lower-than-expected commodity prices could strike a blow to the region’s recovering energy and mining sectors. The possibility of fresh sanctions on Russia also continues to loom large, further adding to uncertainty. However, the outlook is not all gloom, with the economy of Armenia, Tajikistan, Uzbekistan and Turkmenistan are expected to grow above 5% in 2019 (and Georgia to be close to 5%). Several of the region’s energy producers also reached an agreement to cut oil production along with OPEC countries, which is expected to boost the oil prices. How to address the economic challenges in CIS region? Where are the major risks, opportunities and returns for investors?
Investors will meet and hear directly from 6 fast growing companies. Each Fast Growing Company (FGC) has the potential to achieve USD100 million turnover within 5 years. Presented in 8 minute segments, this session presents concise information for investment decisions. Attendees are invited to further engage the FGC managers at the Showcase Hub. Participating FGC’s profiles are available online.
Energy is a key sector with important implications for growth and macroeconomic stability in several CIS countries. The CIS region is one of the largest global energy producers, contributing around 15% of world oil exports and over 25% of gas export. Energy commodities account for majority of exports in several CIS countries. Energy commodities are also a major element in import costs for a number of CIS economies which suggests a vulnerability of these countries to energy price shocks. The significant increase of gas prices in intra-CIS trade in 2008 was followed by tensions between CIS gas importers trying to prevent or limit the pace of price adjustment and CIS gas exporters. In addition, while the region has become less sensitive to oil price volatility, evolution of oil prices and production is still a defining factor in the regional outlook. What is the outlook for energy industry in CIS countries? What is the potential of the CIS region as a source of energy supplies for the EU? Where are the opportunities for investors?
The world’s oil supplies are increasingly concentrated in a limited number of OPEC states – where investment is not allocated according to market forces. The prospect of rising dependence on Middle Eastern OPEC makes the development of non-OPEC supply even more important, given the need for maintaining diverse supply channels, and the potential for instability or threats to supply within much of the OPEC area. The CIS is the largest – and fastest-growing – oil-producing region outside OPEC. However, the greater state ownership of oil-sector assets, and increasingly aggressive and arbitrary administration of licensing and other regulatory regimes will likely to dampen the growth of the CIS’s role in global oil supply. In addition, there is a case for CIS oil producing countries to work with OPEC in controlling supply rather than engaging in price war. How to increase the privatisation of the oil industries while ensuring that the states would still receive their fair share during favourable market movement? What is the role of CIS in the global oil supply, and how can it be incentivised to maintain the diversity of oil supply channels?
Despite Russia’s richness with mineral resources, the government is making a significant shift towards a digital economy, focusing on technologies and human capital. Based on its advanced educational system and strong fundamentals in science, the country comes up with thousands of talents willing and able to transform the world technology landscape. There are many cases of Russian companies going truly global, with some of them transforming into unicorns. What does the Russian high-tech investment landscape look like? What areas are the most promising and have global potential and competitiveness? How do you maximise return on investment into Russian technologies?
Islamic banking, finance and investments are banking, finance and investment activity that complies with Islamic law. Some of the modes of Islamic banking/finance would include Mudarabah (profit-sharing and loss-bearing), Wadiah (safekeeping), Musharaka (joint venture), Murabahah (cost-plus), and Ijara (leasing). Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork, alcohol, gambling etc) is avoided, and some would consider interest on loans to be prohibited. In 2018, the global Islamic finance industry has surpassed the USD2tn-mark in assets which represents 8.3% growth annually. What are the advantages and disadvantages of Islamic finance? What is the market outlook? How is the return of Islamic investments as compared to traditional type of investment? Why you should consider expanding into this market?
Since the collapse of the Soviet Union, the mining industry in CIS countries has gained momentum. Most of CIS countries are rich in natural resources, which results in the mining industry as an important source of income for the region. Some of mining commodities produced in the region would include coal, nickel, gold, silver, zinc, iron, diamonds, uranium and copper. Indications are that the current cycle of improving commodity prices has several more years to run underpinned by steady global annual GDP growth over the next five years, along with significant infrastructure growth in emerging economies (which results in continued demand for mining products). Opportunities also exist for the supplier of mining equipments and processes, especially from Western Europe and the US, due to modernization efforts to increase productivity and reduce downtime. What is the outlook of this industry? Where are the opportunities for investors? What is the bureaucracy and procedures?
Over the decade, a cluster of countries with solid industrialisation, high production and export potential, and regional influence of manufacturing had formed in the CIS. Regional manufacturing exports increased by USD 91.7 billion by 2005 and reached USD 202.5 billion in 2014. Some of the manufacturing sectors would include steel, pharmaceuticals, metallurgy, automotive, chemical, aluminium and hydrocarbon. However, the industrial markets of most CIS countries still largely relied on material processing and low-tech production. In addition, exports from the region mostly consisted of resource- and labour-intensive products, which makes them vulnerable to external shocks (for example, oil and commodity price shocks). What is the outlook of manufacturing industry in CIS region? How the CIS economies able to make transition into high tech manufacturing and reduce its exposure to commodity and oil price shocks? Where are the opportunities for investors?
Tourism is a trillion dollar market with increasing worldwide revenues. In 2009, the industry generated USD 851 billion in revenues globally, and this increased to approximately USD 1.2 trillion in 2015. In 2017, China leads the spending on tourism with total spending of USD 257.7 billion, significantly exceeded the second biggest spender, US, which spent USD 135 billion. It is no doubt that CIS countries and its surrounding region (Turkey, UAE, etc) has much to offer to global tourism market. Unique and varying landscape, relatively cheaper costs and growing trade relationship with China are some of the factors which could boost the tourism industry. What is the landscape of the tourism industry? What can be done to boost the industry? What are the opportunities for investors?
Blockchain, Internet of Things, Artificial Intelligence, Virtual Reality, Genomics, Drones, Mobile Payments, Wearables…Entirely new or restructured industrial sectors are growing at rates faster than the overall economy and disrupting markets. Which existing companies and industries are in danger of being disrupted? Where are the potential for massive growth and returns? How can we capitalise on the opportunities and challenges globally?
Over the past decade, Georgian economy has grown robustly at an average annual rate of 4.5%. Deep reforms in economic management and governance have earned Georgia a reputation of “star reformer”, and the country’s international ratings on governance and the investment climate have soared. However, there are some challenges which include narrow export base, high unemployment rate and concentration of labour force in agriculture sector, and income inequality. What should Georgia do to maintain the current strong economy growth? How to address the challenges? Where are the major risks, opportunities and returns for investors?
Located between Europe and Asia, Georgia is set to be a major logistics, trade and transit hub between East and West. Already, Free Trade Agreements have been signed with China, European Union, CIS countries and Turkey. Georgia is a country with one of the best business climates, and ranks among the least corrupt countries in the world and ease of doing business. This ambition is supported by infrastructure projects which include 185 km-long East-West Highway linking the EU with Central Asia, Anaklia’s Deep Sea container port capable of accommodating high-value cargo with an overall capacity of 100 million tonnes; and the new Baku-Tbilisi-Kars rail link which brings the journey-time between Europe and China down to two weeks instead of 45 days. What industries are likely to benefit from such development? What are the opportunities for investors? And how can Georgia strengthen its position as a trade hub?
The financial sector is one of the most developed areas of the Georgian economy. Two of Georgian biggest commercial banks, TBC and Bank of Georgia (BOG) are listed on the London Stock Exchange and included in the FTSE 250 index. As Georgia’s level of savings is low, FDI is considered an important source of growth. However, at this stage the capital market is still underdeveloped. Only a few issuances of securities occur each year, all small in value. In addition, the financial system is biased towards the banking system, with banking assets accounting for nearly 90 per cent of all financial sector assets. However, for those emerging from the shadow economy, which include startups and those operating in higher risks sectors, are still relying on microfinance organisations (which also face an increasingly tighter regulations). In this session we discuss the capital market developments in Georgia, opportunities for foreign investors as well as how to address the credit demand for those emerging from the shadow economy.
Georgia is in a highly strategic location in that it serves as an entry gate to the Caucasus and Central Asia. Logistics accounted for around 9.5% of GDP in 2015 and about 3,3% of employment. The communications sector is the most stable sector of the economy and has attracted the interest of foreign investors, with the mobile phone operator networks have enjoyed rapid expansion. The Ministry of Regional Development and Infrastructure of Georgia in last several years expended up to 1 billion USD for the improvement of the infrastructure. Some of the planned or executed projects would include expansion of electricity transmission lines, construction of roads and highways, upgrade of oil pipeline and expansion of gas pipeline, and rehabilitation, reconstruction and construction of railroads. What is the current opportunity for infrastructure development in Georgia? What is the process for tendering government infrastructure projects? What sorts of returns can be expected? How to access the finance?
It is predicted that in 10 years, Georgia will experience significant electricity generation deficit. In addition, consumption continues to rise not only in Georgia, but also in neighbouring countries as well. Since only 25% of Georgia’s energy potential is exploited, there is a huge untapped potential, mostly from hydro resources, but also from wind, solar, geothermal and biomass sources. How to invest in this sector? What are the procedures? What are the risks and challenges?
Georgia has much to offer to international film makers. Beautiful landscape, unique and wide range of architectures, modern facilities companies and international-standard production service outfits and crews are some of the benefits of film production in Georgia. In addition, the crew costs are only around a third of what they are in established Hollywood destinations such as London or Prague, and the country introduced a cash rebate of 20% of local spend. We also see the rise of local film production industry which could one day reach international stage. In this session, find out why you should consider Georgia for your film production, as well as investment opportunities in Georgian film industry.
Real estate and hospitality are one of the fastest growing sectors of Georgian economy. Over the recent years Georgia has seen a high growth of international visitors. Between January and March 2018, the number of international arrivals in Georgia amounted to 1,463,561, showing an increase of 15.5% compared to the same period of previous year. Some of the international chain hotels in Georgia are Sheraton, Radisson, Marriot, Rixos, Holiday Inn, Millennium, Best Western, etc. In addition, some of the resort development projects are 315 ha sun-beach resort Gonio on the Black Sea and a unique SPA & balneal destination Tskaltubo. Find out how investors, business operators and real estate developers can tap into this growing hospitality industry; which sectors (hotel, resorts, casino, etc) and area to focus, and learn the procedures and regulatory frameworks.
The retail trade is one of the largest and fastest growing sectors in Georgia. From 2000 to 2018, the retail sales has been growing at an average rate of 16.44% annually. Per capita retail spending has almost doubled from GEL 675 in 2006 to GEL 1,321 (around USD 558) in 2016. However, by international comparisons, this figure is still low. In addition, it is also still dominated by the spending on food (60% in 2016). Note also the growing tourism industry, and the increasing role of Georgia as a trade hub. No doubt that the there is a significant opportunity within this sector. Some of the international brands already in the market would include H&M, CK Jeans, Lacosté, Trussardi, Karl Lagerfeld, Guess, and Armani Exchange. The opportunity exists not only for the business operators, but also for the real estate developer within the sector. Find out which retail sectors (fashion, foods, etc) have the most potentials? How is the retail outlook outside Tbilisi? As a real estate developer, should you consider developing within this sector?
Georgia is traditionally an agricultural country, which was renowned as a quality food supplier during the Soviet times and the Georgian food & beverage products are still well-recognized as healthy and supreme quality brands in CIS region. In addition, Georgia is one of the oldest wine regions in the world, with a history of wine production of at least 8,000 years. The ancient traditional Georgian winemaking method was included in the UNESCO Intangible Cultural Heritage Lists. With the Free Trade Agreement with Turkey, Ukraine and CIS countries an DCFTA (Deep and Comprehensive Free Trade Agreement) with EU, and the growing luxury lifestyle and demand for healthy products in Asia, winery and agriculture industry presents an attractive investment opportunity. Find out the outlook within each of the sector (winery, fisheries, meat and poultry, food processing etc), government’s support and access to finance, and how to tap into the growing international market for healthy produce.