Monday, March 2, 2015

How can Georgia improve?

by  Dimitri Shvelidze

02.03.2015. It is not news that many counties build their economy and strategy mainly on tourism. The hospitality sector plays a huge role in a country’s further development and assists in changing its essence - moving from the developing country’s ‘list’ to the developed.  Georgia’s strategy and vector is mainly correct but the country still needs improvements in many areas.

The main factor is that tourism in Georgia should be boosted in numerous ways and supported by the appropriate agencies, ministries and officials. Our country, despite being very small and suffering from territorial problems, is rich in nature and beauty: rivers, ponds, deserts, mountains, seaside and ski resorts, hills, forests, rich history and cultural heritage - that can all be actively used and must be, in fact.  Currently it seems that there is no clear strategy on where and how our country can be advertised. If such a plan exists, we are not aware of it and then it is a problem of internal communication or maybe a lack of information.  I would like to create a small list of what can be done in order to make international business travelers, investors or tourists interested in our country:

a)    Advertisement - Georgia used to have nice ads that were actively distributed in many EU countries. I consider this practice necessary to be continued, though expanding the area of distribution. Currently Georgia could be very interesting for the U.S., the central and eastern part of the EU, and our neighbors (mindful of the conflict in the north though). An international ad team can also be hired and would be proved to be a worthy investment.

b)    In order to make advertising effective, Georgia must change. It must transform into the travelers’ favor. Exploring successful international practices, we should implement only the best out of them. Currently there is a need for infrastructural improvements in Tbilisi and on a regional basis as well. For instance, Georgia suffers from a lack of sufficient number of WCs within cities and on the roads. Many minor issues can be listed in this section: roads, signs, accessibility, parking, safety infrastructure, cleanness.

c)    Taxation - Many EU countries have used tax reliefs to invest more in their businesses. For example, VAT for the hospitality sector in many western countries is reduced to 6-8% whereas in Georgia this index stands at 18%. The research by Delloite made in the UK concluded that lowering VAT for accommodation will lead, ultimately, to greater revenues to the Treasury, stronger consumer demand and thus more jobs. Simply speaking, it can stimulate tourism, lower costs of accommodation and make these businesses even more profitable.

The research showed that a cut to 5% will generate about 79,000 jobs in the UK.  So, this can be equally effective for Georgia. Obviously, there are other high percentage taxes that affect businesses as well - such as income, etc. Several times it has been announced in Georgia that taxes would be lowered, but this has not yet been done, however it should be as soon as possible.

d)    Make tourists come to Georgia and spend here - organizing international forums, fairs, meetings, concerts of famous stars will also facilitate Georgia’s tourism attractiveness. For example, Maroon 5 will be holding concerts in EU countries this May-June period. Georgia could have also hosted one of their concerts and thereby, boosted their popularity among neighbor countries that tend to be interested in such kinds of events. This is only one small example: Georgia’s location enables us to host international forums, business meetings of a large scale, etc. In this case, not only Tbilisi but regional centers can also be hosting places. For example - the Adjara region, especially in the summertime. We welcome the fact that this Spring-Summer period some of the abovementioned activities will take place in Georgia - the EBRD Meeting, UEFA SUPER CUP and Youth Olympic Games, but it is a very small number and needs to be increased.

e)    Make our country attractive for investors - local and international. The most significant issue is how the Government meets and talks to new, possible investors (or maybe existing). I would like to describe to you one small example: In a hotel, a guest may find that the TV does not have some of the channels that he/she likes, or he/she might not like the length of the bed, etc. but if the hotel’s staff are attentive, respond to requests and are helpful, then minor problems will not have any influence on the guest’s overall impression and he/she will come back again. This will certainly work for Georgia as well. Attitude is the most important thing - how you meet, help and assist. Value of Investment is not important.  Let me describe this section in more detail:

i)    Growing Up - One of Georgia’s biggest problems is a shortage of qualified labor. Indeed, qualified labor is a precious resource whose inadequate supply could pose significant risks to the country’s growth trajectory. It can influence tourism and investment capabilities severely. For instance, if FORD decides to construct a factory in Georgia and start producing cars for the CIS region, the company will face difficulties in finding appropriate candidates to work in the factory. This occurs in many sectors. The Government must assist its youth to become professionals in new, in-demand fields by offering new courses, hiring international experts and at the same time communicating with appropriate companies to invest in Georgia. Having an effective workforce and demand for them is equally vital.

ii)    Effective Legal System - The Government must effectively take away rules/provisions/laws that are unnecessarily preventing existing and future investors from investing more and instead promote the feeling that money spent in any sector will bring income, not problems.

iii)    Coordination - All agencies, ministries or other officials must work in coordination in order to be very effective. Each ministry is in charge of a certain area and can boost tourism capabilities in many ways: If international film festival organizers are interested in holding a festival in Georgia, the Ministry of Culture, Foreign Affairs and Economics can be in charge to cordially support organizers, and advertise this festival on a local and international level. Subsequently, tourism administration and other agencies can work together to plan incoming tours for this festival. Even the Maritime Agency can spread word to their partners, or the Ministry of Sport and various federations can be in charge if films shown at the festival are about sports. Their contribution will lead to attracting many tourists and business representatives to spend money in Georgia, become attracted and feel comfortable. This meeting in fact enables various people to communicate and plan new activities.

f)    Implementing new, effective policy on preserving ecology. Georgia now suffers from exhaust fumes that old cars (as there are few factories) produce. Currently there is no clear policy about importing old, damaged cars, their obligatory inspection or even ban on importing right-hand drive cars that often result in car accidents.  I consider this practice necessary to be changed soon and cars which are in compliance with at least euro 4 standards only to be accepted for import.

To summarize, Georgia is a very promising country in terms of tourism and its abilities must be effectively used. It will result in the country’s further development, stability and wealth. Each government must have a feeling of healthy competition and desire to make Georgia better than yesterday and better than any other more-developed countries. “If you can dream it, you can do it” - well said by Walt Disney. We can all change Georgia for the better.

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