Georgia's Path to Economic Growth: Learning from Regional SME Success

Georgia – the superstar of Economic Reform and Freedom
EU SBA and OECD SME Policy Index
Doing Business Number 1
3800$ GDP –Capita Georgia
How to reach the next level of economic development?
What to learn from the SEE, Balkans, EaP, Ukraine and CEE?
10 Central Strategic Consideration and Recommendations
SME Policy Workshop Georgia 2018
SMEs Learning from and with SEE
3/18/2018www.flattax-europe.eu1
European SME Policy for Georgia

Is Competition Law and its implementation
Anti-State Subsidy, Anti-Monopoly, Anti- Market Power abuse
Openness, transparency, Equality in opportunity and access of State controlled
assets, budgets, concessions, land, information, urban and infrastructure projects
and planning, government data, procurement, taxation, customs, licenses
No matter – big or small, political or personal connected, location in center or
periphery, minority or ethnic or gender or age,
Exceptions only in public interest to support specific groups like women, periphery
regions, specific disadvantaged groups – but again based on clear rules
The essence of SME policy
is Competition
SMEs provide Jobs, Growth, Prosperity

Deep conflicts in all post communist societies
In deed in all European society about economic and social politics
between Free market, Small Gov, Redistribution, Social Democrats and
most decision makers lack economic background
It is essential to reach a consensus between public and SME community
and media and elite and all stakeholders, trade union and business
association, left and right in politics and keep a dialogue between
stakeholders and social partners active
SMEs are creating jobs, bring growth and ensure prosperity for if not all
so most and their employees and families and consumers
Towards a Georgian European SME
National Consensus
SMEs Jobs, Growth, Prosperity

The Georgian European SME START UP WEEK
http://startupeuropeweek.eu/ –February 2018
The European Georgian E-Skills for e-SMEs Week – e-Gov in March 2018 eskills4jobs.ec.europa.eu/
The European Georgian Week for SMEs and Regional Development May 2018
http://ec.europa.eu/regional_policy/regions-and-cities/#!/home
The European Georgian SME WEEK - Presentation of Georgian SME Progress Report 2018
https://ec.europa.eu/growth/smes/support/sme-week_de
The European Georgian SME Entrepreneurship Week 2018 http://gew.co/ in November 2018 focusing on
entrepreneurship in 5 key SME segments – Youth, Women, Migrants-Minorities, Poor and Periphery
The European Georgian SME Vocational Skills Week 2018 https://europa.eu/newsroom/events/european-
vocational-skills-week_en in December
Developing the SME Consensus
broad Multi Stakeholder Coalition based
6 thematic SME campaigns every year
The European Georgian SME YEAR

The Ukrainian European E-Skills for e-SMEs Week in 15 March 2017
eskills4jobs.ec.europa.eu/
The Ukrainian European Week for SMEs and Regional Development
The Ukrainian European EU SME WEEK 2017
https://ec.europa.eu/growth/smes/support/sme-week_de
The Ukrainian European Entrepreneurship Week 2017 http://gew.co/ in
November 2017 focusing entrepreneurship in 5 key SME segments
The Ukrainian European Vocational Skills Week 2017
https://europa.eu/newsroom/events/european-vocational-skills-week_en in
December
The Ukrainian European START UP WEEK
http://startupeuropeweek.eu/ –February 2018
The SME Year in Ukraine 2017
will have 6 pillars
3/18/20185
The Ukrainian European SME YEAR 2017

The European SME Institutional
Infrastructure
Developing the SME Infrastructure

http://ec.europa.eu/growth/smes_en
https://ec.europa.eu/growth/smes/business-friendly-environment/regional-policies_en
http://ec.europa.eu/growth/smes/business-friendly-environment/small-business-act/sme-
envoys_en
https://ec.europa.eu/growth/access-to-finance_en
http://ec.europa.eu/growth/smes/business-friendly-environment/small-business-act/sme-
assembly_en
https://ec.europa.eu/growth/sectors_en
http://www.oecd.org/countries/belarus/sme-policy-index-eastern-partner-countries-2016-
9789264246249-en.htm
http://www.ueapme.com/
Which links every SME stakeholder in Georgia
needs to know
European SME Links

Economic Ministries, Central Bank, Tax & Customs, Land Register
Business Chambers, FDI and Bilateral Chambers, National Associations and
Sector Federations,
BSP like Banks, Insurances, Accountants, Notaries, Lawyers, CMC
Consultants, Consulting Engineers, Export and Certification Consultant,
Quality Infrastructure Experts, Financial and Property Evaluators
Donors and International Projects
Round Table for SME reform progress monthly
National Council under Minister 4 times a year
One Top Level National SME Congress with State President of Prime Minister
present and taking Patronage and receiving the Annual SME Status
Competitiveness Consensus Progress Report
National SME Consultation Competitiveness Consensus
Council

A SME Bank on National Level
A SME Policy Agency on National Level
Regional SME Development Agencies
Power to SMEs– Power to Regions
Austrian SME Policy is done by Ministry of Economics
https://www.bmdw.gv.at/Seiten/default.aspx
And Investment promotion from ABA https://investinaustria.at/en/ but SME support
Austria SME Financing by Austrian State SME Bank www.aws.at and most SME by
Austrian Regions with 9 different Regional SME Agencies https://www.ecoplus.at/ & https://www.biz-
up.at/ http://www.salzburgagentur.at/ https://www.standort-tirol.at https://www.sfg.at/ https://www.kwf.at/ http://www.wirtschaft-
burgenland.at/index.php?id=17 https://wirtschaftsagentur.at/
SME & Regions
But as well
Regions
competing for
SMEs

1. Smart Virtual EU Accession – maximum adoption of EU
Regulation within maximum compliance coupled with maximum
competitiveness – accelerate adoption cost effective
2. EU DCFTA, EaP, Energy Community fine but not enough
Georgia in CEFTA and RCC, RAI and SEE Structures
3. A new alliance with all pro European EU accession countries
4. Learning from, with and cooperating with the Balkans
SEE – Ukraine, Moldova and Georgia united in SEE
Good – so far – now for the second step
European Governance & Market Access & European
Investment Security –SME Competitiveness Consensus
Treat yourself like future EU Member

1. Do not fall in trap of following some Western European
economic model of 2018 – you will end like Greece
2. Germany and Austria of the 1960ies
3. Slovakia and Estonia of 1990ies
4. Croatia and Bulgaria 2000
5. Macedonia and Montenegro 2010ies
6. Western Balkans in EU accession trajectory 2025- 2029
The SME Growth miracle - of Austria in
1960ies, CEE in 1990ies, SEE in 2000,
Balkans now, and now in EE
Repeating the SME Growth Miracle

1. NATO Member Montenegro 2017
2. Most Advanced EU Candidate
3. Tourism investment as driver
4. Good reformer but Georgia is better
5. 9% Tax rate
6. GDP 6,7000 capita
7. Complex relation with former colonial master
8. Could be extend to Kosovo and Macedonia and Albania
Towards a Georgian – Montenegro
strategic Partnership
Twining Balkan and Caucasus SME
Reform Leaders

Regional Cooperation RCC http://rcc.int/
CEFTA Trade, Investment and SME www.cefta.int
Public Finance Education http://www.cef-see.org/
Public Administration Reform http://www.respaweb.eu/
Entrepreneurship Learning http://www.seecel.hr/
Transport and Infrastructure http://www.seetoint.org/
Anti - Corruption http://rai-see.org/
http://www.ecfr.eu/article/commentary_why_ukraine_should_become_a_balkan_country
The SME Growth miracle –in a stable
framework of pro European accession and
regional cooperation mechanism
Georgia join SEE Regional Cooperation

Georgia is already in Energy Community of SEE

CEFTA was developed to prepare EU accession in trade and
investment and SME policy – it worked its magic for CEE, SEE and
now for pro European Eastern Europe
It is like economic preparation area for EU
It brings Georgia closer to the EU Candidate countries
It is just the start of an alliance for pre Accession on the road for a
Thessaloniki Guarantee for Georgia EU Membership
Never forget – the BRD and the Cyprus example!
Moldova is already in CEFTA-
Ukraine considering CEFTA
Georgia should now join as well
Georgia, join CEFTA!

Georgia, Join the SEE Center for Entrepreneurial
Learning in Zagreb http://www.seecel.hr/

EU regional cooperation and coordination structures
Visegrad 4, Baltic Council, Nordic Council, Benelux,
RCC &WB6
United to and in Europe
Cross Border Trade, Development of border regions,
larger market, overcoming regional antagonism, joint
infrastructure projects - European Infrastructure
Interconnectivity
most trade in SME sector should happen with neighbors
Regional Economic Integration to accelerate EU future &
Regional Competition between Jurisdiction and Economies
Regional Cooperation EU Style
SME and SEE
Regional Economic Integration
Kosovo 3,6 -10%
Montenegro 6,7 -9%
Albania 4,2 – 15%
Macedonia 5,3 -10%
GDP-Capita –Tax rate
Albania NATO
Montenegro NATO
Kosovo in Euro
Montenegro in Euro

Certainly there are development models in the world without EU or supranational
trade integration but not in EU periphery and not for small and medium economies
To reach the next level of 7 to 9 thousand GDP per capita to double GDP in next
decade to reach todays level of Montenegro, Bulgaria and Romania and Croatia
SME requires all sector of the economy to reach the regulatory quality, stability and
density of safely invest in and the rule of law and the market size only EU integration
provides and offers with a Powerful EU Internal Market based on the four freedoms
and the unprecedented liberalization success from energy to transport etc
And the decisively battle for Competition, Anti Subsidy and Anti Monopoly can only
be won against vested interests in EU context and with EU support and within EU
framework
A EU Framework is required to achieve the next level to ensure
the European Governance, EU Market Access,
European Investment Security and
EU SME Reform and Competitiveness Consensus
European SME policy requires EU
framework

Financial Education – Business Planning
https://www.ifc.org/wps/wcm/connect/b4f9be0049585ff9a192b51
9583b6d16/SMEE.pdf?MOD=AJPERES
Payment delay and enforcement – Late Payment Directive of EU
– Implementation http://ec.europa.eu/growth/smes/support/late-
payment_en
New SME access models – Leasing, Factoring, Purchase order
Financing http://fitsmallbusiness.com/purchase-order-
financing/
Promotion of e-payment- fight against informality
https://www.betterthancash.org/
SME Access to Finance
The key for growth
Why Europe matters for SMEs…Let us discuss the most
crucial issue SME access to finance…

SME Focus of Banking Sector
http://ec.europa.eu/growth/access-to-finance_en
Micro Finance System
http://www.ey.com/Publication/vwLUAssets/EY-and-university-
of-cambridge/$FILE/EY-cambridge-alternative-finance-report.pdf
Accounting Reform – Easy Financial Planning
https://ec.europa.eu/growth/smes/business-friendly-
environment/accounting_en
Land and Banking –Kataster and Collateral https://www.land-
links.org/
The accelerating upwards helix of SME growth based on a
proven success trajectory
SME Access to Finance
What is matter for the next level
3/18/2018
www.flattax-europe.eu
21
Why Europe matters for SMEs…

Land, labor and Capital – continue excellence in taxation and openness -
only distributed profit taxed- excellent, Open Labor market, low labor
related social charges and pension costs,
European Kataster and e-construction permit Open Land Market
SME Institutional Framework – The Austrian model
Power to Regions – Power to SMEs
Doing Business – e-Gov – e-SME
EU perspective –via CEFTA and SEE and CBC
A European Georgian SME Policy Reform and Competitiveness
Consensus
Save guard the excellent achievements
Now for the second level of European
SME Policy
6 Central Success Factors
SME Jobs, Growth and Prosperity

www.flattax-europe.eu
gfehlinger@gmail.com
https://www.facebook.com/gunther.fehlinger.3
European Georgia based on EU SME Policy
The most competitive,
open and free country in the European Union
United to and in EU with is 8 fellow European
Reform Countries with SME and SEE
3/18/201823

Georgia's Path to Economic Growth: Learning from Regional SME Success

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