Survey Reads Only 62% of Enterprises in Georgia Know DCFTA
By Tea Mariamidze
Monday, March 12
The recent survey, conducted in ten regions of Georgia, including Adjara, revealed that only 62% of small and medium enterprises (SMEs) in the regions have information about the Deep and Comprehensive Free Trade Area (DCFTA), signed with the European Union in 2014.
DCFTA is a free trade agreement between the EU and Georgia. The DCFTA is a part of the country's EU Association Agreement. It allows Georgia access the European Single Market in selected sectors and grant EU investors in those sectors the same regulatory environment in the associated country as in the EU. The agreement officially entered into force in July 2016.
The name of the conducted survey was "Georgia on the European Way: Creating an Effective Model for Implementation of DCFTA and Small and Medium Enterprises Strategy". 559 SMEs were interviewed in total.
According to the survey, 38% of small and medium businesses in the regions have not heard about DCFTA, 62% of enterprises have information about the DCFTA, although their knowledge is quite shallow.
"The level of awareness about DCFTA is not high. Most people say they know about this agreement, but this does not mean that they can say what the DCFTA benefits are. Entrepreneurs have just heard about the contract,"says Natia Daghelishvili, one of the authors of the research.
The majority of the companies that have information about DCFTA are located in Samegrelo-Zemo Svaneti and Samtskhe-Javakheti regions.
The survey says the entrepreneurs get information about the DCFTA from media, state agencies, social media and other sources.
The vast majority of respondents positively evaluate DCFTA. Nevertheless, the survey found out that most of the surveyed business organizations did not have information on exporting to the EU market.
According to the survey, most of the surveyed SMEs sell their products in Russia, Turkey and Ukraine. Only 15% of companies export their production to the EU while 58% exports to non-EU countries. In total, only 23% Georgian companies carry out exports.
Moreover, the small and medium enterprises were asked what their main stimulus for export to the EU market was. Nearly half of the respondents (46%) reported it was sales growth. 35% said they like the prices in EU while 11% said their main aim was to diversify export.
77% of the interviewed companies say they do not export at all. The company's representatives named five main factors, which, according to them, hinder them from carrying out export of their production.
1. Lack of partners in EU countries;
2. Lack of information about the procedures required for the export to the EU market;
3. Low volume of production;
4. Lack of resources to produce sufficient volume of goods for export;
5. The lack of quality certificates for exporting to the European Union;
SMEs must take certificates to be allowed to export products to the EU unified market. 73% of the surveyed companies do not own a certificate at all.
According to the Georgian legislation, Small or Medium Enterprise is a company that employs over 100 people and its annual turnover does not exceed 1.500.000 GEL.
The survey was carried out in July-August 2017 and in total 559 SMEs were interviewed.