Dateline: Tbilisi, Georgia
There is much to love about America as a concept — free markets, liberty, nature, opportunity, etc. — but that concept is often more fully realized elsewhere. As we often discuss here, emerging markets provide many of those qualities. There is one country, located in one of the most unlikely places in the world, that stands out as the “next America.”
They might as well call this place “the Republic of Easy”.
Late last week, I opened a personal bank account here in less than seven minutes from start to finish. I imagine if you’re not a US person, you could shave a minute or two off that time.
I’ve been saying that Georgia is one of the most underrated economies on earth. Thanks to the hype of geopolitical tension, some investors have written off Georgia due to its past run-ins with Russia. However, Georgia offers some compelling reasons to invest, do business, and even live here; it’s a great place to plant at least one flag.
One of the concepts we discuss here is the idea of finding “new safe havens”. Each year at my Passport to Freedom conference, I share my seven favorite countries that I believe are “safe havens” for wealth and freedom.
While it’s still possible to bank in Singapore, you’ll have a hard time getting legal residency or a passport there; the country is so well developed that they can be extremely picky about who they let in.
The same goes for South Korea, Hong Kong, Macau, and any number of other countries that have come up from nothing to become economic powerhouses. Once a country establishes itself, it becomes much harder to plant flags there.
If you’re looking for a country that is wide open for business and welcomes foreigners with open arms, it’s hard to find many countries better than Georgia.
In fact, I’m going to put myself out there and predict that Georgia will become the next “America” in your lifetime. Just remember, you heard it here first.
Want a Plan B?
Here are ten reasons why…
1. Almost everything is easy
In addition to opening a bank account in less than ten minutes, I was able to be pre-approved for a mortgage loan in one visit. If I decide to buy property here, I can have up to 60% of the property value loaned to me… no arduous haggling with a mortgage broker required.
It took me about as long to get health insurance as it did to open a bank account. My lawyer’s assistant walked in to the insurance office with me, had me sign one form and pay $48. Within a matter of minutes, I received proof of coverage.
What’s more, you can’t walk down any major street without tripping over numerous “pay boxes” that allow you to do everything from pay utility bills to top-up your prepaid phone to deposit money into a gambling account. I’ve never seen anything like it.
The government even guarantees a response time for many form submissions such as residency applications, and you can pay a small premium to expedite the process. That means that you can set up a company in one day or apply for residency with a guaranteed decision in one month.
Georgia realized a while back that making life easy for investors and businesses was the path to prosperity. Like Singapore, it will take time for the full effects of their policies to bear fruit, but they are on the right track.
2. Taxes are low
After obtaining independence, Georgia went about slashing taxes. As I’m fond of repeating, the new government eliminated 15 of the 21 taxes in place when they took power over a decade ago, leaving only six general types of taxes.
Personal income tax here is a flat 20%; not quite as low as a few emerging European countries, but low and simple to file.
Corporate income taxes are even lower at a flat 15%, with small businesses paying as little as 5% of profits in tax.
Better yet, Georgia taxes on a territorial basis, meaning you only pay tax on Georgia source income. If you run an offshore business, you can likely exempt that income from Georgian tax. The same goes for foreign rental incomes and capital gains.
3. Opportunity is wide open
While banks have made doing personal business easy with the aforementioned kiosks, innovation in the online space is slowly catching up to the rest of the world.
Georgia is not the world’s most entrepreneurial culture, which I suspect is part of why they are so open to foreign entrepreneurs coming in, much like Chile. Online services like food delivery have started to catch on, but services as simple as a website to sell your car don’t exist in any meaningful way.
Basically, almost any online, SAAS, or service business that exists in the United States or Western Europe could be copied and pasted into Georgia.
4. Almost everything is cheap
I’m not a backpacker, nor am I fond of ranking destinations based on their cheapness. After all, if you’re a wealthy European business owner, moving to Monaco and paying for 35 euro hamburgers might make sense with all of the taxes you save and efficiency you gain being close to home.
However, Georgia pairs efficient markets with cheap prices. I don’t believe prices will remain cheap forever, but for now you can enjoy good Georgian wines from $5 per bottle (and marginal wines for less), a meal in a Georgian restaurant for as little as a few bucks, and abundant cheap fruits and vegetables. I’ve been eating berries like a madman this week as they cost a tiny fraction of what I pay in Asia.
Alcohol is similarly cheap owing to the lack of tariffs on products. The biggest savings you’ll enjoy here is on cars; a seemingly perpetual glut in the market, as well as low import duties, keep prices quite low. You could throw a stone anywhere in town and hit five used Mercedes.
5. Banks are excellent
My experience above seems to be common; you can open twenty bank accounts in Georgia in the time it would take you to open one in Panama. Even Hong Kong banks have been dragging the account opening process lately.
Individuals and companies are both welcome to open multi-currency accounts here; standard accounts are setup for Georgian lari, US dollars, and euros, but you can easily add Russian rubles, British pounds, or several other exotic currencies as well. If you need to change currencies, money changers quote tiny spreads, especially on dollars.
Several Georgian banks are traded on the London Stock Exchange, and several have backing from, if not outright ownership by major US and European banks. Unlike most countries, crappy banks like HSBC and Citi haven’t infected the market with their subpar offerings yet, and due to the small size of the country and the high level of service here, I doubt they will.
For now, you can earn 5% interest on a US dollar term deposit, and 3-4% interest on British pound and euro term deposits. If you want to hedge any exposure to the Georgian lari you acquire, you can earn up to 9% on lari deposits as well.
6. The country is open and diverse
Not everyone wants to live in a huge city, and Georgia offers a laid-back charm that you won’t find in many other Asian cities. Tbilisi itself is home to 1.2 million people, about the size of Dublin. And the country as a whole is home to almost 4 million people, about the size of Ireland.
Tbilisi is relatively spread out and has distinctive features like forests and hills. I’m currently looking at a property in an area that resembles a very rustic Hollywood Hills.
If you want nature, Georgia has it. If you want water, Georgia has that, too; Batumi is the major city on the Black Sea and has become quite a resort destination for tourists and gamblers. Plus, if you want to ski, Georgia has that, too.
Unlike the United States, Georgia boasts thousands of years of fascinating history. The country is spread out despite its small size, and those looking for clean air and peace will find it here.
7. Foreign brands are taking notice
Georgia is the kind of place where you wouldn’t expect to find a lot of foreign brands. Considering most people couldn’t find it on the map, you’d be surprised at just how many foreign chains are doing business here.
McDonald’s has locations throughout the country and has for some time. Local companies have purchased franchises for Wendy’s, Dunkin’ Donuts, Subway, Domino’s Pizza, and other top brands. Georgians have an affinity for the West in a way even most Eastern Europeans don’t.
8. Personal freedom is still high
The one downside some might see here in Georgia is the police presence; police are everywhere. However, I have yet to hear any stories of police misconduct, and locals view the police quite favorably outside of the usual police business like handing out speeding tickets.
Unlike in the United States, where police hide out to catch speeders and collect money, police here tend to flash their lights at all times to show their presence. I imagine that some of the political uncertainty here led citizens to want a heightened sense of security, and the police do seem accessible.
Beyond that, there is a feeling of personal freedom in general. Procedures like getting a drivers license are straightforward and not burdensome. In fact, many government services operate under one roof in what I’ve described as a highly efficient operation.
9. It’s wide open to the world & becoming a legal resident is easy
Georgia is the only country I know of that offers 360-day tourist visas to practically anyone. If you have a US, European, or South American passport, chances are high you’ll be allowed to come and stay for an entire year. It makes visa runs a thing of the past.
Outside of the “usual suspects” of countries that require a visa, such as Iran and India, Georgia’s visa policy is wide open. Even those that don’t qualify for visa-free admittance can apply for an e-visa entirely online. Additionally, holders of visas or residence permits to 33 different countries, including the EU and the US, can enter Georgia visa-free as well.
You can even come and work while on a tourist visa.
Even better, becoming a resident of Georgia is easy if you’re from most Western countries. The United States in particular is adored here; who else do you know that would name a major street after George W. Bush?
By starting a Georgian company, you can obtain a business visa and then apply for temporary or permanent residency. You’ll need a place to stay while living here, but apartments can be as cheap as several hundred dollars a month.
Obtaining residency here is much easier than in many of the Central and South American countries like Panama that we frequently recommend. You won’t need to bring FBI Reports or piles of paperwork.
10. Freedom of trade
One of the alleged pillars of the American system is free trade and open markets. Today, there are so many new regulations every year that a paper copy of just one year’s activity is the size of a dozen or so phone books.
US trade regulations are so intense that even expats and US companies doing business overseas are subject to them. Under the FCPA, US companies can’t give gifts to foreign officials. Thanks to OFAC, US persons and companies must hire high-priced lawyers to ensure they don’t do business with an Iranian or a Belarusian. Compliance costs are insane, and that doesn’t even count all of the domestic regulations companies are subject to.
Georgia has none of those restrictions. It’s zero-tax/low-tax Free Trade Zone near the Black Sea city of Poti actively encourages businesses from the Middle East and even Iran to set up shop there.
You’d think there would at least be an embargo on trade with Russia or Russians, considering the Georgian territories of South Ossetia and Abhazia are essentially frozen conflict zones… but you’d be wrong.
Additionally, tariffs were practically wiped out under the post-Soviet regime change. The average tariff rate is less than 1%.
In short, I believe Georgia will be the “next America” — the next country to enjoy the “American dream”. I believe that “America” is a concept, not a country, and while there are a few factors left to fall into place here, I’m confident that the country is moving in the right direction.
If you’re interested in doing business in Georgia, apply for a personalized Strategy Call to get set up the right way. Connections in this small country are especially important, specifically with people who not only speak English, but can also get the job done.
Want a Plan B?
Latest posts by Andrew Henderson (see all)
- “Hell Yes!”: 2 hard lessons I learned while going offshore - June 21, 2017
- Five US Tax Myths about expats, nomads, and renunciation - June 16, 2017
- How Portugal’s Golden Visa program became so inefficient - June 12, 2017