The Parliamentary Sectoral Committee has published the results of a thematic survey on the problems faced by small and medium enterprises in the crisis and post-crisis periods. As part of the review, 22 interested parties, including government agencies and the private sector have submitted comments and suggestions to the Committee.
According to the report, small and medium-sized businesses were the most affected by the pandemic in the country, which represents 99.7% of the enterprises in Georgia.
“The crisis reflected on the number of employees employed in the small businesses (decrease of 28% compared to the previous 2019), and the most negative data on the decline by turnover accounts for the medium-sized businesses (10% decrease). The data provide strong evidence that small and medium-sized businesses are much more fragile in times of crisis and do not have adequate response and survival tools," the document said.
Small, medium and family-type hotels are named among the affected sectors; as well as the restaurant business; travel agencies and service providers, entertainment sector; sports facilities; kindergartens; and passenger transportation services.
As for the challenges, according to the survey, small and medium-sized businesses have problems especially in the regions. In particular, they do not have direct access to decision-makers, they do not have consulting companies, they do not have resources, therefore, when the state develops incentive programs and packages and solves this or that issue, small business involvement in the process is not possible.
According to the report of the Sectoral Committee, communication between the central and local authorities is relatively weak. Consequently, local governments do not have adequate information on current programs or regulations.
The document states that one of the main challenges for small and medium-sized businesses in the post-crisis period will be access to preferential funding sources. Therefore, it will be important to develop a tool for long-term delivery of cheap credit, and in addition to the current program, it is possible to include items that will help restart the activities of those who have been damaged during a pandemic.
The group working on the document concludes that the introduction of e-commerce can be effective in overcoming problems in the post-crisis period.
It will also be important to strengthen the policy of promoting import substitution, for which purpose it is desirable to develop separate programs and make targeted offers to small and medium enterprises operating in Georgia.
“International trade; international quality certifications; modern machinery; lack of laboratories, logistics and marketing remain a major challenge for small and medium-sized businesses”, - the document says.
The authors of the document say that digitalization of business is critical to increase access to international markets, and to activate programs to transfer relevant knowledge, skills and technologies.
"Under international agreements, including free trade agreements, Georgia has very good benefits for increasing its export potential, and these benefits are mainly enjoyed by large businesses rather than small and medium-sized enterprises. Under the DCFTA, the Ministry of Economy has a relevant web-portal where information is provided and the procedure is described. However, it would be good if it is available in a simpler form. Conditionally, when an entrepreneur wants to export his product to the Chinese market, he must be able to obtain information about the requirements in a simple and understandable way," the report said.
In addition, the document focuses on several issues, the most important of which is the introduction of a "one-window principle" for obtaining the information. Accordingly, the Ministry of Economy is the main addressee of the recommendation of the thematic research group. As of the document, this agency should ensure the introduction of the one-window principle, as well as the launch of an information portal, where both existing capabilities, regulations and guidance documents will be available.
