Business Sector Urges Government to Take Timely and Efficient Steps
The most relevant challenges in the business environment and their communication with the authorities, according to Levan Silagava, president of Georgian Producers’ Federation, and Iva Chkonia, the heads of Georgian Distributors Association have talked about these issues.
As reported, Georgian Prime Minister Giorgi Gakharia has begun meetings with business sector representatives. Last week the Prime Minister urged a Minister from the government’s economic team to hold meetings with the representatives of various business associations. As instructed by the Prime Minister, the Georgian Economy Minister, Natia Turnava, will receive the business sector’s representatives this week.
At his meeting with the Georgian Economic Minister, the president of the Georgian Producers Federation plans to discuss the predictability of the business environment and issues relating to the stability of the national currency. Without these two key factors, we cannot ensure rapid economic growth. We should ensure a predictable environment in this country. All companies and investors are waiting for a predictable environment, he noted.
“When investors plan to put money in the country or business sector plans to implement some kind of project, they should know how their products will be developed in long-term perspectives. Consequently, we should ensure the stability of the GEL exchange rate. These two challenges refer to everybody. Consultations should also be held with the business sector when adopting laws”, Silagava said.
The Producers Association’s president also urges us to promote domestic business through state tenders, as happens in the developed countries of Europe. The state budget has allocated five billion GEL for state procurement, and this is a quite serious amount, he added.
We expect the tourism sector to bring in 3 billion USD in income, while the state budget has allocated 5 billion GEL for state tenders, about one third of the total state budget’s total. and it is important for us that these funds be spent on domestic production in a competitive environment, on products that will compete with foreign analogues, Silagava pointed out.
“When the Prime Minister was the Economy Minister, his idea for promoting domestic production was proposed, and this project was almost adopted. For some reasons, the project was suspended later. This practice was abandoned worldwide, and all countries try to develop domestic production through state tenders, and create new jobs from the proceeds, and increase payments to the and strengthen the national currency. In a similar environment, even importers may change their mind and launch production of the same products domestically”, Silagava said.
Problems with communication between various branches of the executive create real challenges, he said.
“There are communication problems with the government; in the decision-making process, various ministries from the economic team – the Ministry of Economy, the Ministry of Finances, the Ministry of Agriculture= consider some issues from different perspectives. In these cases, a single perspective does not work, and businessmen have to run to various Ministries to somehow get answer to their projects”, Levan Silagava noted.
Iva Chkonia, the head of the Georgian Distributors Association explains that the GEL exchange rate stability is the number one objective for the Economy Ministry and the whole government.
At his meeting with the Economy Minister, he plans to discuss the issue of GEL stability, because GEL volatility is the key challenge in his sector.
“It is very important for me, as the head of the Distributors Association, where there are a lot of companies that import who directly depend on the national currency’s stability, and to have information about how the authorities and the national bank understand the concept of GEL stability. If they mean that the GEL should be stabilized now, and the stable exchange rate should be maintained, then we should not cheat either the business sector or the population, because the 2020 state budget bill has fixed the exchange rate at 2.98, and what should we stabilize? In this case, they should say that the current exchange rate is stable, and it will be lowered by the New Year”, Iva Chkonia said.
Because of the rapid devaluation of the GEL, it is impossible to determine long-term plans, while the GEL exchange rate is a key factor in the distribution business, because the exchange rate’s volatility provokes volatile prices and disorients the business sector. Therefore, government officials should, first of all, remove problems in currency volatility, he said.
“Distribution is one of the key components of the economy, and the GEL, as a factor, is a key determinant in this respect. Therefore, a key recommendation for the Economy Minister and all the authorities, is that they must ensure the GEL exchange rate’s stability. If they could ensure the GEL exchange rate’s stability in previous years, but they did not take the necessary countermeasures, then this is a crime, and we should call them to account”, Iva Chkonia noted.
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