The President of Georgia chaired a government session held in Batumi. The session was attended by members of Parliament and representatives of Georgian business by the initiative of Mikheil Saakashvili. According to the Head of State, the government’s ten point action plan should be implemented with their participation.
“We have gathered at a wide session today, which is attended by the representatives of Georgian business the people who nourish our economy and citizens of Georgia, because you are the ones paying taxes. It is unfortunate that the weather is bad, but this is normal for the end of February. Those of you, who have not been in Batumi in a long time, probably noticed the new construction. Batumi is the face and a symbol of the new Georgia. The fact that living spaces are being built over an area of 1.2 million square meters is worthwhile, because of the right economic and administrative measures, construction is booming in Batumi. 180,000 people live in Batumi today. If we make a proportional comparison this type of construction was underway in Kiev with 4 million in population in Kiev two years ago. By the way, most of the construction is administered by the local work force. I was recently at a building complex with Levan Varshalomidze, which has a beautifully decorated revolving restaurant on the top. You know that the “alphabet tower” is a beautiful communications tower, which has TV studios, restaurants and other entertainment centers inside and it is covered by the Georgian alphabet on the outside. In the beginning this was a state project, which later developed into the partnership of public and private sectors. Before we started implementing this project, the businessman from Batumi Sharashidze built it. If I am not mistaken, he built a hundred meters high beautifully designed building in only one year. He also noted that he has never been farther than Trabzon. He started with one house, than he built another one – none of them known with the name of “Mix” that is now in front of “Sheraton”.
Georgia has potential everywhere; because only businessmen from Tbilisi are represented here we should not think that we are only focusing on Tbilisi. The local business potential has developed in a very interesting way. By the way, the same thing is happening in Kakheti now, where we have to implement large plans next year, because we started rebuilding Georgia I said that Batumi is the symbol of new Georgia, however Kutaisi will catch up to Batumi and Kakheti will also not stay behind. The standard was created here as the base of which the rest of Georgia will be rebuilt. It is very fortunate to enable a person to create and that person demonstrates the talent and the industrial skills to do it. A more flexible generation has been brought up in Georgia in an effective business community in a free environment. We are going to discuss the ten point government action plan through an open discussion in which all of you will participate” – noted the President.
The issue of modernization, economic growth, and the problem of unemployment were among the topics discussed during the government session. The Prime Minister – Nika Gilauri presented a detailed report regarding these issues to the President and the members of government.
First of all Nika Gilauri drew attention to the changes in the 2011 budget and then talked about the ten point action plan of the government. According to him the changes are the result of increasing economic growth to six percent, which creates an opportunity to plan the budget according to this indicator. This point is also shared by the representatives of the monetary fund, who the Prime Minister met yesterday. Nika Gilauri considers the fact that this Monetary Fund and international economies have predicted the economic growth of twenty countries to decrease very important.
“We are the only country in the region to expand the economy by six percent accordingly, this is important for many reasons. This is important, because more economic activity will lead to more employment. Besides that, this is an additional attraction for investors, who are looking for new markets. While there is stagnation in all other countries, we can attract new investors because of our stable macroeconomic indicator”– noted the Prime Minister.
The second thing the Prime Minister talked about was the ten point plan of the strategic development of Georgia. According to him this is a “live” document which will be renewed every six months, posted on the website, and accordingly every citizen of Georgia will have a chance to express opinions and suggestions. As he noted, this plan is the strategy and the social economic policy of the country for the next five years. The plan, expressed in specific numbers aims to achieve acceptable results in various spheres in order to create jobs. Decreasing unemployment is the main task of our government. Nika Gilauri stated that this is the reason for creating the above mentioned document.
The Prime Minister also touched on the details of this plan and noted that the first issue is macro stability, which is currently one of the important factors in world economics.
“Today, one of the main indicators of stability is macroeconomic signs. In this regard Georgia is one of the healthiest countries. Our debt is quite low, but we are planning to even decrease it. In sum our debt is forty one percent and we have a decreasing tendency. It is our goal to decrease the debt even more through the ten point plan” – noted Nika Gilauri.
As Mikheil Saakashvili stated during the session, Georgia had more debt in 2003 than now. According to him, the debt since 2003 was effectively spent on the development of Georgia. However, during the previous government the public officials used the debt taken for corrupt transactions abroad or brought it home. The President thinks that the money taken as debt should increase the GDP, decrease the debt, which will be hard on the next generations. In his turn, the Prime Minister of Georgia verified that this is exactly what the ten point plan is all about.
Nika Gilauri also drew attention to the other aspect of this plan. According to which, Georgia will become a regional hub. He stated that, our country has already been formed as a tourism center to a certain extent.
“For example, I will tell you that this year we had a 41 percent growth in tourism and last year we had a 40% growth. The country is actively working in this direction, the examples of which are the projects of Batumi, Anaklia and Mestia. It is safe to say that every visitor spends 250 USD in Georgia, which is distributed through entire society of the country. Georgia has already been established as a logistical and investment center. Companies come to Georgia, establish a base, and afterwards trade with Azerbaijan, Armenia, and other countries in the region. The automobile business is a good example of this. It is true that Georgia does not produce automobiles, but it is the number one export product of Georgia. Many producers and dealers choose Georgia to bring their product and sell it to the neighboring countries. According to our data, more than 8,000 people are employed by this business. The fact that our country is becoming such a hub is very important in terms of developing industrial zones. We already have industrial zones in Kutaisi and Poti and according to our prediction; more than 1,500 people will be employed there next year." - stated Nika Gilauri.
Infrastructure was the third part of the ten-point plan, which Nika Gilauri talked about. According to him even during the construction of new infrastructural projects, thousands of people are employed and after the completion of this construction new companies and investors come and create even more jobs. Gilauri noted that 30,000 people are employed at road infrastructure construction every year. He also mentioned that in the nearest future 13-15 thousand people will be employed at the construction of new hydro-electric power stations, the contract for which have already been signed. As the Prime Minister noted, the construction of 10 hydro-electric power stations is underway.
Next year it is planned to build 11 hydro-electric power stations maximum, the Kars-Akhalkalaki railway, modernize Batumi and Tbilisi. Detour highways around Tbilisi will create 8 000 jobs. As a result of this project we will have a modernized logistical centre with electricity, natural gas, and road infrastructure.
"It is our goal to start preparing now so that in 3-5 years, when these projects are finished, Georgia will be multi-purpose transport and energy hub and will serve not only our country, but the entire Caucasus region and mid-Asia for which Georgia represents a gateway." - noted he.
The agriculture was the next important part of the ten-point plan that the Prime Minister talked about. He stressed that development of agriculture is one of the main goals of the government. He mentioned several directions, the most important of which is the storages. The private sector which was given land by the governments has already built five storage facilities, which are designed for 35 tons of harvest. These facilities will be coupled with large regional logistical centers and will create the opportunity to store 200 thousand tons of harvest. According to Nika Gilauri, this will give us a chance to maintain the quality, to organized products and to increase export in the future.
The second and third most important issues of agriculture are related to the export. According to the Prime Minister, the country has been fairly successful in this direction. The export of wine has reached 18 million bottles this year, last year it was only 14 million. The goal of the government is to sell 27-30 million bottles each year. This is also a part of the 10 point plan.
The last part of this program which NIka Gilauri mentioned at the government session is the development of the healthcare and education systems. He noted that a lot has been done in this direction already. Some examples are exams for the 12 graders, teacher certification, and incentives for teachers. He emphasized an important project, which envisions founding the Batumi Technological University with Millennium Challenge Corporation. The Prime Minister also touched on the issue of developing healthcare. He mentioned that 150 hospitals are been built and the doctors will be re-trained.
Nika Gilauri added that next week the government will start discussion with people of various professions and representatives of business in order to consider their ideas, offers and remarks.
The President of Georgia also listened to the ideas of representatives of the business and the legislative body and spoke about the prospects of developing the county's economy.
"We have reviewed the indicators of economic growth for several years. At the beggining it was 4.5 -5% and now it is a minimum 6%. I predict that in the conditions of normal development it is possible for this number to reach 7%. In Russia, which has oil and gas this indicator is at 2-3%. The same situation is in the Ukraine, which is caused by the catastrophic fall of the economy in the recent years. In spite of that, the indicator of these countries is lower than ours. The prediction of growth has also fallen in Turkey from 10 to 5%. This does not make me happy, because we have dense economic partnership with these countries. First of all, this is an indication that Georgia represents an exception which is a merit of the projects we started implementing in recent years.
The second issue is what will happen next year. If a trend of even a small positive development appears in the world economy, we will have a real chance of getting back to the two digit economic growth indicator and reaching 10 %. This is possible through implementing the infrastructural projects that we have already started – the construction of hydro electric power stations and the investments in the healthcare and various economic spheres. We will also have a fairly high indicator in the sphere of tourism – next year we are expecting approximately 4 million tourists.
Our economy is not balanced today and depending on the year the trade deficit fluctuates between 2 and 3 billion. In the recent years a part of it was balanced as a result of remittance, meaning the money sent back to Georgia by the Georgians living abroad. The investments and loans were the second balancing factor. Development of tourism was able to balance it completely, but we have to create production that will be oriented on export. This is the main challenge for Georgia. We have to raise productivity, the coefficient of additional cost. If we can achieve this we won’t need money sent to us from abroad anymore and the economy will balance itself out. This is exactly one of the main issues of the 2015 Modernization Plan – to create the level of productivity, which will make it possible to replace this deficit with the production cost. In the conditions where we have low productivity in the agricultural and other spheres, this is absolutely possible.
Lots of interesting things have been done in terms of defense – high technologies have been developed and a new laboratory was founded recently at the Technical University of Georgia. All of this indicates that we can create certain technologies. Now the most important thing is to make the creation of Technical Universities and Technical Schools a motivation for this.
One thing is general growth numbers and what we have created (several procedures happen faster here than anywhere else in the world) and the second thing is what social effect this was followed by. We are the only country in the Eastern Europe and Post-Soviet space that has a positive migration balance and this is why Georgia is unique – more people return to Georgia than leave. Poland, the Baltic States, Slovakia, Ukraine nor Russia has achieved this. According to the official surveys, 24% of the population of Russia wants to leave the country. It has to be noted that the youth in Georgia no longer wish to leave the country, because they have prospects of getting good education, employment, and career advancement here. We are creating a meritocratic country, where people will have a chance to advance based on their talents and abilities, which first of all benefits the youth.
Our largest setback began at the end of the 80s and reached the worst in the 90s. When I talk about the lost generation I don’t mean that they do not exist anymore, I just mean that they had no chance of advancement and success and it was not their fault. This happened because the social and education system of the state practically collapsed and the crime rate was high. These people are our honorable friends and relatives, but they have the largest problem. We administered a full reform of the state apparatus, which had the largest impact on the people of a certain age group. I am not talking about the road policemen with large bellies, which were standing on street corners – they deserved to be fired. I am talking about honest people, who went to work every day, had work experience up to 30 years of age and did not steal anything. Beginning from the time of Coupons they even worked without salaries, because that was their social function. It is a huge tragedy that the majority of these people have been left without jobs. That is why employing them is our social challenge.
I have an offer which is very important to me. If any business, any of you employ people of 45-60 age you will be exempt from income taxes to a certain extent. We have a lot of educated people, but they were just unlucky. This will be the first stimulating force for the businesses – being exempt from income taxes. We will think of more stimulating packages to assist employment of these people in the private sector. It will also be stimulating for you that we will help you retrain each one of these persons so they are compatible with the demands of the job market.
The Ministry of Education already has a methodology for a permanent education system. This methodology is similar to that of South Korea. According to this methodology every person constantly gets education and readjusts to the job market demands. This is very important because skills and talents of no person in Georgia should stay unused. This is also important because we need to keep and better the high levels of social optimism that is already present in Georgia based on the social surveys. These people think that the country is going in the right direction, however in this sense the variety is noticeable among the age groups and this worries me greatly.
By the way, when we are talking about agriculture we should recall the corn program implemented by us, which in its turn is a great program and it worked in most cases. I was reviewing the numbers a while ago and it is clear that the corn program was successful in the Kakheti region by 90%.
However, there were regions where this program did not work and these were mostly the places with a small territory, with old methods of working on the soil and not enough knowledge how to do it among the local people.
This was not only their fault. It was our fault as well. We probably did not explain well what they had to do, we did not organize technologies well enough and we did not train the 20% of population, who did not get a lot of crops, well enough. It is true that they have received a lot more crops compared to the previous years, but not as much as we were expecting. However, on the 80% success background there is not a lot of unsuccessful people.
Akaki Bobokhidze introduced an initiative in Parliament about not making the people, who did not have the income they expected because of these kinds of seeds, pay and relieving them in the future as well, so that they learn better how to take care of this particular type of corn. This is overly important. I personally bought my vine from very good people, but it is organized as it was in the past. There is a new grape and wine production facility nearby and my grapes and theirs differ like the soil and the sky. This is a small example of what I am talking about.
When I say that we should not have a trade deficit I am talking exactly about the fact that this facility should better its production quality. In this sense we need your advice and support because each one of you is involved in this business. Let’s work together to advance in this direction.
Zaza Gorozia and I decided to create pilot agricultural facilities as well as logistical and storage centers. Creating production is very important, but storing it is no less important. The primary consumption products should be created in abundance and they should have a higher quality. Reaching the international market is also very important.
I am very unsatisfied with the work of “Samtrest” and its manager has been relieved of his duties. The process of reaching the international market is advancing with turtle steps. This person had several years to do something valuable. We accomplished certain things, some things have changed, we won court cases, but practically our wine has an incredible potential and we should not be dependent on others. Thank God we are not in the same position, but there should not even be a question whether we will reach the Russian market or not. I spoke to the Moldovans, who have been granted access to the Russian market as it seems, but this has not happened in reality – their lives have become miserable. Export of our wine should not be dependent on someone named Onishenko. We produce less wine compared to Moldova, but our wine is of an incredible quality and there are a lot of markets we could have reached and conquered had “Samtrest” worked better.
That is why, Zaza [referring to Zaza Gorozia] if I were in your shoes, I would use the strategy of the Tourism Department. Vera Kobalia found Maia Sidamonidze as a result of competition, through Skype and this department is working very well today. You should also hold an international competition and find the best Georgian manager, who is familiar with the issue of the international market, knows the ways of reaching it, and knows foreign languages, so that we make this body work effectively.
We should also cooperate with the private foundation, which is a partner of the Ministry of Agriculture and which will probably be headed by Bakur Kvezereli. Bakur is a really good specialist and let’s plan with him what we are going to do in this direction, so that the partial participation of the state is planned precisely, in a well calculated and effective manner. I am against unfair rules and overwhelming involvement of the state, but if we can help the private sector in any way, we should definitely participate, however the private sector should lead in this matter.