Public Private Dialogue - Action Plan:

Recommendations for the Improvement of PPD in Georgia

Background:

The Business community of Georgia wants to highlight the importance of the ongoing transformative process in Georgia into full-fledged market economies, which entails both challenges and opportunities. The Business Community wants to work together with the public sector to improve conditions for growth and a more favourable business climate. This transformation process and implementation of necessary reforms can best be done by involving the private sector in the policy making process. We, the Business support and private sector organisations call upon the political decision makers to consider us as partners for the design and implementation of reform processes, strategies for economic development and regional cooperation.

Background:

For involvement of BSOs in decision-making process and improvement of Public Private Dialogue several platforms and institutions are created in Georgia:

Investors Council was created in April 20, 2015 by the decree #829 of the Government and with support of European Bank for Reconstruction and Development (EBRD). Investors Council is an independent advisory body to the Prime Minister of Georgia, with the objective of promoting dialogue between the private business community, international organizations, donors and Government of Georgia for the development of a favorable, non-discriminatory, transparent and fair business and investment climate in Georgia.

The IC is responsible for facilitating constructive dialogue and exchange of views between the Prime Minister, Ministries and other executive Agencies under their subordination on the one hand, and the private sector on the other hand, in order to improve and encourage a sound investment climate.

Investors Council is chaired by the Prime Minister of Georgia. The Investors Council consists of the members with permanent status and members with non-permanent status. Members with permanents status from Georgian Government: Minister of Economy and Sustainable Development; Minister of Energy; Minister of Finance; Minister of Agriculture; Minister of Regional Development and Infrastructure; Minister of Foreign Affairs. Permanent Members from among international development partners: EBRD; Non-permanent (rotating) members from among international development partners: International Finance Corporation (IFC) and Asian Development Bank (ADB); Members with permanent status from the business community: Five Business Associations: Business Association of Georgia; American Chamber of Commerce; Georgian Chamber of Commerce and Industry; EU-Georgia Business Council;

International Chamber of Commerce. It is anticipated to have two further members from business associations on a rotating non-permanent basis. Business Ombudsman of Georgia is also member of Investors Council.

Under the Ministry of Economy exists Trade Advisory Council, Council for SME issues, where BSO/BMOs are involved.

In 2015 with support of USAID G4G project was created Economic Policy Advocacy Coalition (EPAC). EPAC aims to support development of a business-friendly environment through inclusive and effective dialogue between public and private sector actor. For today it unites more than 76 BSOs, BMOs, think-tanks, chambers of commerce; It is unstructured, without management, members are not paying membership fees. Coalition is created under the USAID G4G project which supports activities initiated by the members of EPAC or are priority for donor. G4G, USAID project is a four year project which will last following 2 years and after it is planned to reorganize the coalition in order to be more self-sustainable.

The PPD Platform in the Parliament of Georgia was established in April 2016 by Business and Economic Centre (BEC) with support of the USAID ‘’Governing for Growth’’ (G4G) in Georgia Project. BEC is a not-for-profit, non-lobbing and non-partisan organization with more than 10 years of experience in policy analysis and PPD facilitation, established in Georgia in 2004 with support of the EU Commission as a part of the UK-based international network of PPD platforms – the Enterprise and Parliament Dialogue International (EPDI).

BEC identifies priority reforms and works to facilitate public private dialogue with support of donors by involving different stakeholders in Public Private Dialogue.

Business Ombudsman - In 2011 Tax Ombudsman institute has been created. The base of foundation and of performance of activities was article 42 of the Georgia Tax Code, besides main principles and forms of activities of Georgian Tax Ombudsman, were defined by the Decree of the Government N92 dated of 23 February 2011. As from 05 June 2015 new law on Georgia Business Ombudsman came to effect, on the base of which the institute continued operating under a new name.

The Business Ombudsman supervises protection of rights and legitimate interests of a person related to the entrepreneurial activities performed on the territory of Georgia, reveals the facts of violation of those rights and legitimate interests by an administrative body and facilitate restoration of violated rights in accordance with the rules stipulated by the law.

Legislation on Public Private Dialogue

Law on Lobbying activities was adopted by the Parliament of Georgia on 26.10.1998. According to the law, lobbying activities are defined as "the influence by a person registered as a lobbyist (...) on the representative or executive body in order to implement such changes in legislative process, which are not prohibited laws of Georgia." According to the definition of "change in legislative process" is "the adoption, amendment or repeal of a normative act." The "representative body" according to the act is: "Parliament of Georgia or sakrebulo [county, city or town board]. The Act does not apply to approval process of decrees of the President of Georgia (during a state of emergency) and the regulations of the President acting as the supreme head of the army.

Current challenges:

· PPD in Georgia is highly unstructured and is an informal process that mostly takes place on an ad hoc basis (without any clear measurable goals being set in most of the cases);

· The dialogues, when held, are mostly organised after the initiative has already been drafted to be presented to parliament., not when it’s being prepared.

· Private Sector’s recommendations and initiatives are rarely heard/implemented;

· Participation in PPD activities is relatively mild although there are groups with more limited access in each direction, particularly small businesses;

· There is less involvement on regional level;

· There is a very low degree of satisfaction with the facilitation role played during the PPD process. Based on the study “Assessment of Collaborative Governance Gaps in Georgia” (15.10.2015), respondents were extremely pessimistic about the role of the individuals involved, though it was noted that they could be more valuable given more administrative and technical support.

· In the absence of direct legal obligations for inclusive consultation during initial stages of policy formulation, most representatives of the public sector do not see the need for ensuring dialogue with the private sector. This problem is especially significant in draft law cases initiated by Members of Parliament (MPs), who showed insufficient examples of PPD quality.

· There is a general lack of understanding for the need as well as practical application of regulatory impact assessment (RIA) in Georgian reality, even in the case of draft laws with substantial economic impact. In the absence of direct requirements to conduct comprehensive RIA, many authors of draft laws with economic impact limit themselves with the explanatory notes. However, the information given in explanatory notes is often too scarce and superficial, not supported with publicly available research and not part of wider public discussion before the draft law is officially initiated (https://idfi.ge/public/upload/pdf/ppd_annual_report_eng.pdf).

Actions to be taken to Improve PPD:

· Creation/further development of strong Business Associations (Business Membership Organisations)

· Create/Further develop/Support Sectoral association

· Create/Further develop Support Regional associations

· Enhance cooperation between Think Tanks, Academia and Business Association and the creation of valuable knowledge within the Business Associations

· Create a positive image of entrepreneurship, SME and SME Associations

· Support Business Association according to Quality Criteria, Potential and Sustainability

· Create an open discussion/dialogue climate towards Business Associations (SME Associations)

· Establish regular dialogue/consultation channels

· Establish dialogue/consultations channels on all levels of the public sector (village level, city level, national level, ministries, President)

· Implement confidence building measures and activities to enable open dialogue

· Set rules for a quality PPD between Business Associations and the Public sector

· Set rules for quality reforms, their implementation and the monitoring process

· Create a system of Monitoring and Evaluation of these recommended processes, an indexation for benchmarking and a system of public control of technical support programs (funding).

· Guarantee the revision of existing state regulations of economic activities based on the principals of effectiveness, limited intervention and focus on economic growth (smart regulation).

· Involve Business Organisations in the Monitoring and Evaluation Process

· Donors and International Financial Institutions should bind financing to the quality of the decision making process (PPD) for projects;

· Regulatory Impact Assessment to be obligatory (highly recommended?) on the government initiatives directly affecting businesses and business environment.

· Adopt legislation which would oblige public institutions to conduct PPD in the process of developing economic reforms.

· Institutionalize the process, adapt government decree which would oblige all relevant ministries to create a department direct obligation of which would be to ensure PPD between private and public sectors.

· Create a system for monitoring and assessing extent and quality of PPD in major economic reforms;

· Improve capacity of public sector to plan and facilitate effective PPD process;

· Improve capacity of private sector to engage in PPD process