Sectors & markets

Creating Enabling Environment for Sustainable Business in Eastern Europe and Central Asia

Eastern Partnership Countries

Creating Enabling Environment for Sustainable Business in Eastern Europe and Central Asia

 

11 Ocotber 2019

 

The conference was organized by the office of Business Ombudsman of Georgia and CiDA (Civil Development Agency) with the financial support of Sweden Government.

 

The importance of Business Ombudsman as institutional support for business development has been highlighted by Deputy Minister of Economy, Mr. Nikoloz Alavidze in his welcoming speech.

Memorandums of Understanding have been signed between Business Ombudsman of Georgia and Kazakhstan, Uzbekistan, Albania and Poland aiming to help the office of Business Ombudsman of Georgia establishing international cooperation at a new level.

 

International Mechanisms for Business Rights Protection

 

Statistics from the World Bank show that 20% -25% of investors in developing and transition countries simply leave. Political risk, lack of transparency (rules changing often) and sudden changes in law regulations have been named as main reasons of leaving a country. Theimportance of investment retention and expansion and the negative impact of investors leaving have been highlighted as well as the early resolution of problems being a key of retention and expansion of investment.

Frequent changes in law regulations has been identified as the main challenge in the activities of Business Ombudsman of Georgia in 2018 and today.

Invited Business Ombudsmen presented their activities, spoke about similarities and differences in the structure of their offices, shared their experiences and challenges that they face. All of them mentioned that the main goal of their offices is to show to potential investors that if things go wrong, they will be protected.

OECD representative spoke about business integrity in eastern partnership countries and role of Business Ombudsman in promoting business integrity. Legal uncertainty, weak economic freedom, protection of property rights, open and fair competition have been identified as general risks of doing business in the region. According to the report, companies, especially large and international, have compliance programs but on paper, without enforcement and the enforcement by government is low both in relation to companies and public officials. The upcomingproject of OECD-EBRD for 2020-2022 has been discussed. In the scope of the project, tailor made technical trainings on concrete issues will be delivered and forums on anti-corruption and compliance will be held.

Meetings between different actors and good communication for better understanding of processes and problems as well as use of advantages of digital transformation have been emphasized.

All participants highlighted the importance of independency of Business Ombudsman’s office. However, the independency seems to be understood in different ways. For instance, for Business Ombudsman of Kazakhstan, his independency is the fact that he gets the financial support only from business (membership fees) while in other countries, Business Ombudsman offices are mainly financed by the World Bank or the European Bank. In Ukraine, the independency is viewed as the legal right and possibility to go even against the President if needed. Small discussion was held on this issue.

 

Corporate Sustainibility and Innovations - Future of Business in Eastern Europe and Central Asia

 

Firstly, the expression of need of CSR from compagnies side has been discussed. The invited speakers unanimously declared that there is a very low demand from compagnies about CSR. According to the Executive Director of CiDA, recent study showed that with the growth of the companies, their CSR grows also. However, only 26% of big compagnies consider that CSR is part of their activities and strategy. According to the Head of Corporate Social Responsibility Club, the CSR is a new trend in Georgia, and it is normal that the compagnies do not consider CSR as an instrument for sustainable development.

Two platforms have been promoted:CSR Club and UN Global Compact Network Georgia having ambitions to raise the awareness and promote CSR among Georgian and foreign businesses. It has been said that there are different approaches and understandings of CSR in Georgia, but the important thing is to cooperate and share positions on human rights, environment protection, and good governance in order to achieve inclusive and sustainable development within the country.

How the innovation can help sustainable development of business has been discussed. According to the Deputy Chairman of Georgia’s Innovations and Technologies Agency, there are a lot of innovative start-ups and they are definitely oriented towards sustainability. The growing number of start-ups will also create more competitive environment and oblige big compagnies to put in place innovative and more sustainable products/services.

Educational institutions, media and government have been identified as the major role players in promotion of CSR and sustainability. The role of influencers has been highlighted to take initiatives.

 

Investment Potential of Georgia and Investment Promotion

 

The promotion of local business, the increase of export and the growth of direct foreign investment represent 3 missions of the Program Enterprise Georgia. Creation of new sectors in economy has been noted as excellent mean to attract a new investor who will be surely followed by many others in the future.

According to Georgian National Tourism Organization, the country has significant potential in the tourism sector (with 8.7 million of international visitors in 2018). In 2015, touristic strategy of the country has been elaborated aiming achieving 11 million of international visitors by 2025. The aim is to increase the number of visitors who are spending more significant amount during their trip in Georgia. The importance of diversification of visitors has been emphasized as well as the need of offering unique experiences to survive in a very competitive environment. The importance of Kutaisi airport and more and more direct flights have been highlighted as well as promotion of new sectors such as agro-tourism and eco-tourism.

Mr. Giorgi Pertaia, from Georgia Chamber of Commerce and Industry, spoke about the need of growing positive awareness of Georgia in foreign countries. The program “After Care” was mentioned aiming to provide support to investors after investment. The main challenge is to find a good balance between law regulations and business environment. For instance, with opening to Schengen countries, new European regulations are to be implemented in Georgia but is the country ready for it?

Mr. Giorgi Khelaia, from Partnership Fund, made a presentation of activities of the fund closing the conference. Various investments in different sectors (energy, infrastructure and logistics, agrobusiness, manufacturing, real estate) have been presented such as, for instance, Georgian tea rehabilitation project, olive gardens, new pig farms, sandwich panel factory, concrete block factory, reconstruction of luxury hotels in different regions, Anaklia Deep Sea Port project.

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