10.May .2021 23:00

All the best, Mr. Hudak! | Editor's Note

All the best, Mr. Hudak! | Editor's Note
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Georgia's PM has a special advisor on attracting FDI. Vazil Hudak, with a direct link with Georgia as now former EIB Vice-President has been presented to the wider society on a special briefing on May 7, 2021.
 
The decision came as a surprise since no one from the Georgian Government had even hinted before that appointing a foreign advisor on bringing in foreign investment was being discussed.
 
Since Prime Minister Irakli Gharibashvili sticks to his policy of minimal communication with media only through briefings without the possibility to ask him additional questions, we still do not know whether there were some other candidates discussed or Mr. Hudak was the only and direct choice of the Prime Minister.
 
Also, it is yet hard to judge what the exact job description comes with the new appointment – the only practical goal that has been identified on the first briefing is for Georgia to become part of the 50 billion euro initiative of Europe to support the SME sector globally.
 
"It is aimed as an endeavor for greater resilience – Vazil Hudak, an EU envoy for SMEs, explained at a briefing - We have to operate in a difficult period together. It is true for Europe and globally. It is due to COVID.
 
However, I believe that difficult times are opportunities as well. We have an opportunity now to grow and develop in many different directions, create better quality in various areas, attract support from the USA, EU, and other countries. We know how to recover the economy through investments, more economic development, and advancement. I believe that this is the future of Georgia as well in the EU".
 
As Vazil Hudak has briefly explained, this program has two main aspects: digitalization and green or environmental initiative to address climate change. "These are the future directions of Georgia as well – to become more digital, more modern, and greener. I believe that Georgia will thus come closer to Europe, and it is the major aspiration of the Government of Georgia too" – Vazil Hudak noted.
 
Actually, this is not the first time that readers of BMG English and viewers and followers of The Checkpoints heard about Europe's initiative to support the green economy and SMEs. As just one example, to focus on that was a very pointed suggestion from the IMF in my interview with Jihad Azour, the Director of the Middle East and Central Asia Department at the International Monetary Fund, which was aired by The Checkpoints in early April 2021.
 
"We see the potential for new partnerships – Mr. Azour said in the interview – Europe is investing in a strong recovery. That's expected to be a green recovery. This offers the neighboring countries like Georgia to benefit from that".
 
Just yesterday, ADB revealed to The Checkpoints in an exclusive interview as well that ADB is working hard with commercial banks to ensure long-term cheaper loans for SMEs to give them a chance for longer-term investment and growth.
 
"Going forward, we are also interested in developing opportunities for longer-term financing. Right now, it's hard to get financing that is any length of time, and that makes it difficult to make longer-term investments – the types of investments that businesses need to grow to employ more and more people. Those loans are very hard to get, and we think that it should be a priority to the financial sector more broadly, which will help SMEs but many other businesses as well," – Shane Rosenthal, ADB Resident Representative, told me on Sunday.
 
Even earlier, in March, The Checkpoints and BMG English gave you thoughts of Mercedes Vera-Martin, former IMF Mission Head to Georgia, on SME importance but in a totally different light, linking it directly to the need for FDI as Georgia's economy starts to recover gradually. In my interview with former Mission Head, Mercedes Vera-Martin stressed that "special efforts" needed to be put in place to attract FDI in the country. Well, a special advisor on attracting FDI seems just like that.
 
"You are in the location that can be very attractive between East and West – Georgia being at the crossroads – Mercedes Vera-Martin explains in an exclusive interview - The fact that you have FTA with China and also with the EU can help some companies find location advantages by being placed in Georgia. And for a country like Georgia, you don't need to bring in very large companies – I mean, those are welcome, and they bring a lot of know-how – but you can also bring in medium-sized enterprises".
 
Our loyal viewers and followers might also remember BMG English's big exclusive with Odile Renaud-Basso, EBRD's President, where she stressed that EBRD would stand with Georgia in its goals to focus on greening the economy and coming closer to implement the Association Agreement. "That will be very important," – Odile Renaud-Basso told me.
 
So, not to go too far, just looking at our resources, namely, BMG English and The Checkpoints, there seems to be a consensus among the international community that Georgia needs resources to support and develop SME sector and green economy initiatives in Georgia, and if the political situation in Georgia stays balanced, then Georgia should not have problems to benefit, again, from international programs.
 
So what Vazil Hudak underlined as part of his role during the briefing – "to help the Government of Georgia in finding ways to mobilize other resources. International support will bring more benefit to the Government of Georgia" – might not seem as though a goal as what the Prime Minister Irakli Gharibashvili also noted in his address, namely, in terms of pulling together PPP projects and investments in strategic sectors. With all major or minor HPP projects on hold and with Anaklia's case still in international arbitration – a fresh look at challenges might serve Georgia really well.
 
Prime Ministers' open call – Georgia needs investments – is a focus on FDI that many of us - in business or in business media - have been waiting for. Covid-19 has served as a good catalyzer to notice problems that have been piling up for more than a couple of years now.
 
According to preliminary data, the volume of FDI in Georgia amounted to 616.9 million USD in 2020, which is down by 52.9 % compared to 2019. The current FDI inflow is the lowest since 2008-09, which has been a post-war period in the country. According to official data, FDI hit a 15-year low in 2020. According to Geostat, the main reason for FDI decline is the transfer of several enterprises under the ownership of the Georgian residents, which resulted in an FDI reduction by 340.5 million USD.
 
Both business associations and major private sector players positively affirm Prime Minister's decision to bring an experienced voice to the international negotiations table. But firmly maintain one emphasis – The Government of Georgia should listen to its advisor.
 
BMG – on its different platforms – has extensive experience to interview and listen to Vazil Hudak. We hope this practice will continue.

Meanwhile, half a year should be enough to start to notice the first results of Vazil Hudak's advice to the Prime Minister. As one of the prominent Georgian businessman Temur Tchkonia told me in a live TV interview in Analytics with Elene Kvanchilashvili – we will notice it easily. "We have zero FDI today; when we have more – this means we can measure Hudak's advice."
 
All the best, Mr. Hudak!