Issue 2, 2016. April-May

   

THE FOUR-POINT PLAN

Georgian Prime Minister Giorgi Kvirikashvili has tasked his cabinet to tackle key challenges to the country's economy, which include extensive reforms for the tax system, the public sector, vital infrastructure and education.

Prime Minister Giorgi Kvirikashvili has announced an ambitious four-point reform plan to help the Georgian economy grow. in an email exchange with investor.ge, the prime minister detailed the vision for the steps his government will take to bolster growth and employment in the country - and improve Georgia's competitiveness in the international market.


PM Giorgi Kvirikashvili at AmCham's February luncheon

Fostering development and inclusive economic growth

The four-point reform plan was created to achieve two overall objectives: foster greater development of the country, and encourage inclusive economic growth. We are confident that the comprehensive reform plan will enable us to make significant strides across all sectors of the Georgian economy. The Georgian government's reform plan was developed through extensive analyses of the current situation in the government and the country. Our assessments focused on identifying opportunities to spur growth and development in the civil, private, and NGO sectors.

The Georgian government has identified a number of key opportunities to bolster economic development as well as encourage growth - and increased access - to the financial sector, particularly for small- and medium-sized enterprises. While a number of state programs offer different levels of financial support - such as the "Produce in Georgia" program that supports the agricultural sector - there is still room to do more. We have identified opportunities to develop more tailored mechanisms, particularly for start-up projects.

Funds for start-ups

PM Giorgi Kvirikashvili and AmCham President Sarah Williamson

Research conducted by international financial institutions shows that due to the high investment risks associated with start-ups, commercial financial institutions are less likely to support start-ups and R&D-oriented entrepreneurship. Specifically, analysis shows that the most vulnerable projects are those requiring investment in the range of 15,000 GEL - 100,000 GEL.

In order to address this challenge and better support the development of start-ups in the Georgian economy, a new initiative, led by the Partnership Fund and the Ministry of Economy and Sustainable Development, will improve opportunities for start-ups that fall in that investment range. Start-up projects will be assessed based on financial and conceptual criteria, and considered for financial assistance through a fair selection process.

In order to support new investment and foster an environment that encourages new opportunities for entrepreneurs, we found it is necessary to implement key policy measures, such as the decriminalization of minor economic infractions, meaning that pre-trial detention in case of economic crimes will no longer be applied. We have already made some preliminary steps in this direction, e.g. a recent decision provides that taxpayers with no operation will have their tax arrears written off given they meet certain conditions. This initiative aims to ease where possible the burden for businesses and make procedures more straightforward with a view to encouraging investment and entrepreneurship.

Effective, efficient government

The government's four-point reform plan seeks to improve the quality of life of the Georgian people and increase development throughout Georgia. To this end, it is necessary to ensure that public administration and government entities work effectively and efficiently.

For example, to support and encourage continued growth in the private sector, the reform plan seeks to improve the quality of public services offered to the private sector, as well as increase their accessibility. We will be offering a new "single window" of public services to the private sector and "front offices" that will streamline the process - in brief, we are looking for ways to optimize government resources by speeding up decision-making processes and improving their efficiency and transparency.

Strengthening links between businesses and colleges

Vocational education is an important instrument to provide the private sector with a skilled workforce that meets its needs: it prepares technical specialists endowed with practical skills and knowledge. To accomplish this goal, we need to do two things: engage the private sector in the planning, delivering and quality control of vocational education and enable students to learn by doing.

This is why we are focusing on introducing work-based learning approaches into our educational system. Our plan is to build on some of the best experiences throughout Europe and other countries. One of the goals is to enable students to learn in a real work environment so that they are better equipped for future employment. This approach allows the private sector to meet perspective employees from very early stages, such as during internships, or any other form of work-based learning, including dual education. The latter is the key to success in many European countries - including Germany, Switzerland, and Austria - as it helps to strengthen the linkage between business and colleges. This will ensure that both colleges and businesses are engaged in delivering the educational program jointly. All of the efforts regarding vocational education reform, with the support of European Union, GIZ, UNDP and other international and local organizations, have laid a solid foundation for a new phase of reform that will ensure hands-on engagement of the private sector in implementing the work-based learning approach, thus meeting labor market demands. Professional skills help youngsters and adults to get well-paid jobs, but this is not the only purpose of vocational education. We see it as an important instrument for boosting entrepreneurship as well, through providing entrepreneurial knowledge and skills to students. This new phase of reform will open an array of opportunities for students, including employment, entrepreneurship, and pursuing higher education.

The end goal is to equip Georgians with all the skills and knowledge to earn a decent wage and realize their full potential through employment or entrepreneurial activities.

Linking east and west, north and south

Infrastructure reform and development are key components of the reform plan, as this will further encourage development and increased connectivity across the country and its borders.

One of the most important infrastructure projects is the International East-West Highway, which runs along the historic Silk Road route. This new highway will further enhance Georgia's vital role as a hub and connector between Europe and Asia. Other major motorway projects will significantly increase connections and transport between north and the south Georgia through these projects, meaning Georgia can make full use of its transport-logistics corridor potential.

Infrastructure projects are also vital to the continued development of Georgia's booming tourism industry, which is a major driver for economic growth in the country. This includes improving travel routes to resorts in the mountainous regions to support Georgia's role as a destination for international travelers. The Svaneti Road, for instance, will connect 36 villages and, importantly, provide a link between Kutaisi airport - which receives a number of low-budget flights - and all major tourist destinations in Georgia. The Tetnuldi four-season ski resort, currently under construction, will serve over four thousand skiers and house the longest (9.5 km) and highest (1.7 km) vertical fall ski track in the Transcaucasia area. The Bakhmaro resort and spa, situated about 2,050 meters above sea-level, is being reconstructed, and resorts in Bakuriani, Gudauri and Adjara are being transformed into all-season resorts to support the increased demand for tourism.

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