The Business Ombudsman of Georgia, Irakli Lekvinadze, has summarized the 2018 performance of his office, and given the report to the Prime Minister, government members, representatives of the private sector, business associations, economic associations, representatives of the chambers of commerce, parliament and government, donor and international organizations and experts.
In his interview, Business Ombudsman Irakli Lekvinadze talks about important projects implemented in 2018, and future plans for 2019.
-Mr. Irakli, how would you appraise the year 2018, and what important projects would you name?
-First, I would list the new electronic portal, which was launched at the Business Ombudsman’s Office in 2018, with the support of the International Finance Corporation (IFC) and Swiss State Secretariat for Economic Affairs (SECO). The new portal enables entrepreneurs to keep in communication with the Business Ombudsman in digital format. The portal has simplified the process of application to the Business Ombudsman. The portal enables us to supervise the status of submitted applications, and the monitor the process of specific cases.
We have provided an active job with various domestic and international organizations for sharing the experience and deepening cooperation and signed 4 agreements regarding mutual cooperation (Chamber of Commerce and Industry of Georgia, Geostat, Competition Agency and German Economic Association (DVW).
We provide active cooperation with various international organizations, Georgia-accredited diplomats and foreign investors for strengthening cooperation, information exchange and institution building. In 2018 I participated in about 20 high-level international conferences and forums in Georgia and abroad.
-You have mentioned the electronic portal. We know that the Business Ombudsman’s office has started collecting statistics through this portal. What was the situation like in 2018?
-The electronic format of communication has enabled us to gather statistics. In 2018, more than 1000 meetings were held with business sector representatives. The office discussed 316 cases, prepared 167 mediations, recommendations and conclusions in 2018. The recommendations of our office were fully or partly satisfied in 65% of cases finished in 2018. In terms of number of applications, Adjara is a leader, after Tbilisi. The business ombudsman’s office opened its representation in the Adjara Region in 2018, and appointed its resident representative there. The 2018 statistics shows that the majority of applications refer to Ministry of Finance and various structures under the Ministry of Finance.
-You have mentioned Adjara. How visible is your office in the region, and what does the local private sector applications to your office deal with?
-We held various meetings with representatives of the Adjara business sector in April and November of 2018, with the support of the Chamber of Commerce and Industry of Georgia, the IFC and USAID project “Governance for Development”. At the meeting, we introduced a report on the performance of our office and future plans for representatives of the local business sector. We also updated them about mechanisms that we can employ for their support, if necessary.
The most acute problem in the regions is related to land registration and financial resources. After Adjara, the majority of applications are submitted from the Kakheti Region. With the support of partner donor organizations, we will hold meetings with representatives of small and medium business sectors in 2019, too.
-Besides regional meetings, do you cooperate in other directions, too, with international and donor organizations?
-We have already started a working process, and the Business Ombudsman’s office acts as a leading chain in the 2019-2020 national counter-corruption action plan for business honesty. The action plan is based on the recommendation of the Organization for Economic Cooperation and Development (OECD). We plan to hold specific projects, including in partner countries, to deepen collaboration with similar institutions and share in their experience.
-What key challenges would you name in the business sector, and what priority directions will you follow in 2019?
–We have determined our 2019 priorities based on the current challenges in the business sector, including the efficient resolution of business disputes in the court system. For the purpose of growing court efficiency and business sector support, in 2018, we submitted a bill to the Parliament to expand the rights of the Court Friend of the Business Ombudsman’s Office, and besides the Constitutional Court of Georgia, this mechanism will be applied in the system of common courts, too. This component will enable our office to back the business sector in their disputes with administrative offices, namely, to submit recommendations and/or appoint a lawyer in the legal dispute case. We also strive for strengthening the mediation component, and establishing an arbitration court. It is an efficient mechanism to resolve business disputes through mediation, because the mediation enables us to resolve disputes as soon as possible, based on bilateral concessions, without protracted trials and excessive financial expenditures.
With the support of donor and international organizations, in 2019, we held trainings for the staff of our office and government officials for upgrading their skills and qualifications in mediation issues. We plan to further enhance this direction in 2019, and engage in implementing the new phase of promotion of alternative mechanisms for disputes resolution in Georgia in 2019-2020, as part of the new initiative of the European Union and UN Development Program (UNDP).
Bureaucracy in the middle chain of the public sector remains a major challenge for the business sector, as well as adequate and proportional regulations for business opportunities. To resolve these challenges, we aim to prioritize an increase in transparency between public and private sectors, and introduce Regulatory Impact Analysis (RIA) system.
-The year 2018 has brought many regulations and new legislative initiatives. The Business Ombudsman’s office was participating in discussions on labor safety, food product labeling, bank regulations, and other important regulations for the business sector. What results have you achieved, and how were business interests taken into account?
-The past year was very active in terms of new regulations and new legislative initiatives. With positions agreed with the business sector, and thanks to close cooperation with administrative offices, we tried to optimize the regulatory burden so that the private sector might have a reasonable timeframes for implementation.
We have engaged in discussing new regulations for retail crediting. A lot of business associations have applied to us for mediation with the National Bank of Georgia (NBG). We have accepted a lot of requests, and applied to the NBG with recommendations. We managed to make the new regulations smoother, and achieved a postponement of their enforcement. We have also participated in the working process on the Labor Safety Bill, and the Parliament fully accepted 2 recommendations out of 4. We continue to participate in discussion on tobacco control and food labeling regulations, draft laws on agriculture lands, and gambling business regulations.
-In general, how would you appraise the existing business environment in Georgia, and what steps were taken for the improvement of the business climate in 2018?
_I believe the year of 2018 has brought dynamic and positive results for the Georgian business sector. There is a business-friendly climate in our country. Low transactional expenditures, a favorable geographical location, and Georgia’s positioning in international trade relations, based on free trade agreements with our friendly countries, ensure the formation of attractive business environment in Georgia.
In 2018, I would say a simplification of VAT refunding procedures, electronic taxpayer resident reformation, the advancement to the 6th position in the Ease of Doing Business rating of the World Bank (WB), starting cooperation with arbitration court of France and small business sector reformation (new preferential regime of taxation).
-What factors necessitate the Business Ombudsman’s Office’s engagement with the process, and what are the issues with which the business sector appeals to you most often? What mechanisms do you employ for assisting entrepre]neurs in Georgia?
-The production process always outlines challenges that require state reaction. The private sector frequently makes inquiries regarding tax administration and complicated bureaucratic procedures, various decisions and regulations affecting business production in the country, which require new assessments and revision due to new requirements.
In similar situations, our office mediates between the private sector and the authorities. Based on consultations with the private sector, our office prepares recommendations and meditations for the state sector. Thanks to close cooperation with the administrative offices, we try to resolve issues on behalf of the business sector. Moreover, for the purpose of protecting business interests, our office has appointed a permanent representative in the investor’s board, the Board of Disputes of the Procurement Agency, Board of Disputes of Ministry of Finance, and the state commission for examination agreements on the management of state-owned properties.
-And finally, I would like to have your take on the TBC Bank case. Will this case affect the business climate and investor moods?
-Naturally, all similar cases have an influence on the business environment. Any cases that relates to businessmen, any speculation damages the business environment. Such cases require more information and transparency in our society, in the business sector. Investors are very sensitive to such cases and, therefore, they should have comprehensive information. I believe an enhancement of communication with international investors will only bring positive effects. It is important that the investigation process proceed transparently, and at a high professional level. A protracted process will leave more space for speculations and damage the business climate.