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Government Efforts Suffice for Establishing New Enterprises, not for Successful Performance

Government Efforts Suffice for Establishing New Enterprises, not for Successful Performance

Armaz Tavadze Businessman

 – Today, the Kvirikashvili’s Effect is a widely-discussed topic. What is your opinion about the New Prime Minister’s efforts and how useful is the Kvirikashvili’s Effect in the country?

– I cannot grasp the specific meaning of this term, but the government’s attitude to the business sector became more logic and adequate after Giorgi Kvirikashvili was appointed a head of the Georgian Government. Anyway, I think this is a seriously delayed effect and it will take much time until this policy brings real results. Appointment of western-minded person at the head of the Government has evidently changed the state apparatus. Even if a main part of the Georgian government officials shows the same state of mind, the country would make huge breakthrough. Regretfully, the state apparatus lacks for western-minded professionals at all levels.

– What steps should the Government take to boost the business sector’s real development?

– The government, first, should stop inventing new bicycles in any field. The civilized world has already invented and experienced all efficient systems and models. We should just pick up these models and adjust them to the Georgian reality. This is elementary job.

– The Government is announcing a creation of new enterprises in all fields…

– Promotion of creating new enterprises has become a certain trend along with creating serious obstacles to the existing enterprises. New companies are established genuinely, but the main thing how many of them continue successful operation. Today the country provides many opportunities for establishing new enterprises, but the country cannot ensure their successful performance. It is interesting how many new enterprises were instituted and then closed over the past 25 years? I am interested whether somebody makes the statistics of closed companies.

Today the business has to overcome serious challenges in the country. The current judicial system and the state apparatus are main obstacles hindering the Georgian business development.

It is impossible to do business valuably avoiding contacts with either the judicial system or the state apparatus. High-level of bureaucracy and formalism, illogical decisions, inflexible system, unfriendly and non-partnership attitude towards the business sector, Soviet stereotypes and state of mind. Serious efforts should be taken to overcome the superficial changes in the court system and inner atmosphere in state structures.

None of the Governments could alleviate the estrangement between the Authorities and the business sector. All Governments have narrated about promoting the business sector development, but all these narrations are of abstract and virtual character.

If you ask what their priority is, they will answer proudly that development of entrepreneurship environment is their priority, while if you ask them to resolve elementary problems in this field, you will see that these words are invalid and useless. A major part of the officials cannot realize the importance of successful operation of each business company for a small economy.

Starting from the Shevardnadze’s Government until today, many enterprises have opened and closed in the country. State officials adore cutting red ribbons for TV cameras. They find their mission in participating in inauguration of a new facility. They think it is sufficient to give interviews to TV reporters at the inauguration ceremonies with busy faces.

However, real affairs start after the red ribbon is cut. I have been in the business sector for 10 years and in this period, I have spent a major part of my time and efforts on tackling elementary problems with the state structures. Almost all state officials give the same answers – “You are capable, but… you are not capable”.

It has become a tradition that elementary trial lasts about 3 years and the results received after 3 years often are useless. Are you aware how many business disputes are not discussed at courts? And this factor seriously hurts the business.

Another problem arises when you sue against the state, when a business entity argues with the state. In this case, I assure you, a magistrate prefers not to cast light on the truth, but protect the so-called state interests. It is understandable when one judge has to discuss hundreds of cases, he/she cannot discuss them timely and cannot grasp the details of each case. This problem is widely discussed and everybody knows the problem. But what is the result? Nothing. Both the Supreme Court chairman and the Justice Council secretary ignore these problems. In turn, if you ask them, they will answer solemnly that they prioritize entrepreneurship development in the country and all branches of the Authorities are to serve this goal. We have to live in this theater of the Absurd.

– What other problems would you name before the business sector?

– All governments talk about the necessity of developing a securities exchange to create an alternative source of attracting money to the business and to liberate the business from the dependence on expensive money of commercial banks. It is strange that so far nobody in the Authorities has actualized the necessity of developing the stock exchange. Commercial banks own noncore assets and this fact creates obstacles to the development of many business fields. The authorities have failed to reach any essential success in this direction. It is anomaly when commercial banks are able to own companies indirectly in any field and the Authorities have no reaction.  We meet the same anomaly when one business group owns insurance, pharmaceutical and hospital businesses. Georgia is an only country without obligatory insurance. All Authorities have failed to develop the insurance sector as an instrument for protecting the population and business from risks.

Serious problems are recorded in the state procurement field too. Over the past years many company were damaged because of invaluable state tender system. The Authorities have recognized these problems many times, but in vain – nothing has changed.

These themes are evident and no deep analytical thought is required to resolve them. As noted above, we should stop inventing new bicycles The civilized world has long adapted the most successful models. We should find these models and adjust them to our reality. To this end our country needs more open-minded officials with western state of mind and frank attitude to the business sector, who do not have hostile attitude to business under the pretext of state interests, but who recognize that the country will be successful thanks to a great number of successful people.