ADB Central and West Asia Department Director General Werner Liepach - There is much that can be learned from Georgia

The 52nd Annual Meeting of ADB's Board of Governors was held on 1 to 5 May in Nadi, Fiji. The theme for this year’s event was “Prosperity through Unity.” Sustainable tourism and its potential, the role of private sector and the importance of actions to improve ocean health were discussed during the meeting. The Georgian delegation also participated in the Annual meeting. What are the recommendations of ADB for Georgia, what projects are going to be implemented, how they evaluate the economic potential of Georgia - ADB Central and West Asia Department Director General Werner Liepach answered to our questions in the exclusive interview for “Interpressnews”.

According to a new ADB report, skills development will be key to attracting investment to high-value sectors in Georgia. Is ADB going to implement any projects in this direction?

First of all, we are doing new partnership strategy for Georgia which will cover period 2019-2023 and skills development will be very important aspect in our new country partnership strategy. We are looking at particular technical vocational education. During the annual meeting we also talked a lot about tourism. So that will be part also of our country partnership strategy. Going forward we will see more investments by ADB in that sector and we have made up to 50 million dollars allocation in our 2020 program for skills development.

President Nakao was talking about the importance of sustainable tourism and connectivity and logistics with other countries. What are your recommendations?

So the tourism for ADB is becoming important because if you look not just at Georgia but at the region as a whole it’s incredible beautiful. It’s a lot of history, culture and it’s clearly undeveloped potential. Georgia is a member of CAREC program and tourism is a one of the new priority areas. And we have expanded the program. Originally it was very narrow, focused on physical infrastructure, on transport and energy connectivity. Now we look at things more also from a regional perspective, including tourism. If you visit an area, the culture does not always stop at international boundaries, people like to visit several countries at a time, so there’s also a regional aspect to tourism. Georgia is one of the more advanced countries and I think that there is much that can be learned from Georgia going forward in terms of how they attract investment for tourism, and hotel industries.

But there are three things that are needed really in order to promote tourism and make it sustainable. Number one is that you need to have the right policies and the right incentives, and I think Georgia has done a lot of work in this regard already.

The second is to make sure that we have the right infrastructure. So, At the moment, the infrastructure is quite good in the larger cities, particularly Tbilisi and Batumi, there’s a lot of investment there, but it’s still quite challenging if you want to go to Mestia, or some other areas. That is where ADB is helping. We’re trying to do investment into the rural areas or the secondary cities that have tourism potential to improve the infrastructure, both connectivity and electricity, but also internet connectivity.

The third aspect for tourism to develop is skills, and I think this is the area, where perhaps, the most work is still needed, because in tourism, what is a good hotel, if their service isn’t right, people will not have a good experience. The people in Georgia are very warm, very hospitable people, so I think already, this is a very good thing, but the service is something to bring them to international standards, where more work is needed. That is also where the skills development will support that effort. But overall, I do think Georgia has a fantastic potential and it is already, I think, one of the main drivers of economy. I think this is definitely something which, going forward for us, one of the highest opportunities.

The Asian Development Bank (ADB signed a memorandum of understanding (MOU) to explore the development of the Anaklia Deep Sea Port and Special Economic Zone in Georgia. Is ADB going to be involved in project and invest in it?

There was a lot of discussion about Anaklia, and we call it Georgia’s gateway to the world. And I think we very much would like to support it, ADB has entered into a MOU with Georgia on potentially supporting the development of Anaklia. We are considering providing technical assistance to improve the master planning and the sequencing of the many initiatives. Because Anaklia isn’t just a deep-sea port, as you know, it’s a whole city, it’s a whole industrial cluster, it’s a whole economy that is going to be developed around, we’ll expect the investment to be at least $3 billion, so that’s very significant, we would like to work with the private sector to be in this.

This year, we have some important economic reforms in Georgia – pension reform among them. How do you think they will affect the economy?

Pension reform I think is something which is very important for a country, and Georgia’s economy now is at the level where, I think, pension reform needs to be deepened. Generally, no economy can develop without a financial sector, we always see high correlation between the sophistication of the financial sector and the sophistication of the economy. So if Georgia wants to develop, it needs to develop the financial sector. Now, if you want to develop the financial sector, you cannot just develop the financial sector on lending and micro lending, you need to develop the capital market. If you want to develop the capital market, you need to develop the institutional investment, which means developing the pension funds. So from ADB’s side, we’re very supportive of that process.

What do you think are the main challenges Georgia faces?

First of all, the main challenge for Georgia is to create jobs. I think this is what many of our economies face. If you go to the rural areas, it’s always a challenge to keep people there. Beyond that, of course, is the macroeconomic level. I think it looks pretty okay, but it’s just in the state of growth, and to maintain the debt and manage the debt in a sustainable effort. Having said this, we see that the macro indicators at the moment are quite positive. Georgia has a history of volatile growth, it’s a little bit like a heartbeat trade, but I think the challenge is to avoid the heartbeat fluctuation, but to keep it at the high level for a sustained way. So that’s at the macroeconomic challenge. And tourism is a fantastic opportunity because it actually allows you development outside the cities. So the challenges are there, but I think Georgia is comparatively better placed than many other countries we meet at challenges.

It was said, that one of the next ADB Annual Meetings could take place in Georgia in near future. Has the final decision already been made on this issue?

Yeah, I know that there was a request made by Georgia, and I think the bank would consider it very favorably. There are number of countries that have made an application, so whether it is 2021, or 2022, I’m very hopeful that we will see an annual meeting in Georgia in the very not too distant future. The bank has received the request very positively, it’s not really a question of if we’ve got to have the annual meeting, but more like when. I think ADB team will visit Georgia, and draw its conclusion, before we make a commitment.