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Georgia advances to 11th place in Doing Business ratings

By Mzia Kupunia
Thursday, September 10
The Doing Business 2010 report has ranked Georgia 11th of the 183 states and territories surveyed in terms of business regulations and their enforcement, compared to 15th last year. The report, Doing Business 2010: Reforming Through Difficult Times, the seventh in a series of annual reports published by International Finance Corporation (IFC) and the World Bank, placed Georgia on the same level as Singapore, New Zealand, Hong Kong, USA, United Kingdom, Denmark, Ireland, Canada, Australia and Norway.

According to the report, issued on September 9, Georgia has reformed its system of construction permits, making it easier to obtain them, and simplified the documentation needed for import and export and thus reduced the cost of trade. Other criteria under which Georgia’s business environment was evaluated were the procedures for starting a business, employing workers, registering property, getting credit, protecting investors, paying taxes, enforcing contracts and closing a business.

The Doing Business 2010 report says that in a record year for regulatory reform worldwide (from June 2008 to May 2009) Eastern Europe and Central Asia have led all regions in the pace of reforms and were the regions most active in reforming insolvency regimes and easing access to credit. “Governments in Europe and Central Asia continue implementing regulatory reforms as part of their long-term strategies, despite the many challenges of the past year,” Neil Gregory, an Advisor from the World Bank Group, stated, “They recognize that the quality of business regulation helps determine how easy it is to reorganise troubled firms, rebuild entrepreneurs’ confidence and start new businesses,” he added.

Georgian President Mikheil Saaakshvili has said that “Georgia has moved to the top league,” allegorically comparing the rankings to the world sport Championships. “I know very well that none of our citizens live in the same conditions as Australian or US or Swiss citizens. However the Government is able to do certain things, and other things we must do together,” the President told people gathered in the town of Telavi in the Kakheti region to attend the Government’s Report to the People.

Saakashvili downplayed opposition criticism of the government’s handing of Georgia’s economy, citing the report. “This is not a rating made by the Georgian Government, it is not part of our so-called PR and propaganda, this is a report by the World Bank and IFC, which studied the situation here very scrupulously throughout the year, and which think that there are only 10 countries in the world where it is easier, a bit, to do business than in Georgia. There are 190 more countries, where it is a lot more complicated to do business,” the President said.

Saakashvili told Telavi residents that the Government had managed to fulfill its main promise given at the Rose Revolution. “The Government has been able to create opportunities and prospects and hope that the people can live in better lives. It has managed to give chances to the people. Now it is up to all of us, to the Ministers and I and first of all to all of you and our businessmen, to take advantage of this,” he said.

The President also used a visual method to demonstrate more clearly how Georgia had advanced in the ratings. Speaking in the centre of Telavi, he presented several different vehicles from an old cart to a white Mercedes Cabriolet, symbolising the different levels Georgia had been placed in by the Doing Business ratings at different times. “We used to be at the level of a cart, ranking 137th in the rating. Then we started carrying out reforms and went up to 37th place, making us a Zaporozhets car. Then we worked some more and got up to a Volga in 17th place, then we worked harder and got into a contemporary Opel in 15th place. Now we have become a Mercedes Cabriolet with today’s 11th place. When we get into the top 5, we will be a Porsche or Ferrari,” Saakashvili said.

Georgia’s improvement in the Doing Business rating is important in terms of attracting more investment, economic analysts suggest. Professor of Economics Nodar Khaduri told The Messenger that starting business in Georgia has in fact become easy. “Now it is 5:15 and you can register a company by 6 pm, at the end of the working day,” Khaduri said. However, he noted that the simplicity of starting business is just one component of the economy. “There are some problems in other fields of the economy, for example we are ranked in 90th place in the competition ratings. Although the Doing Business rating shows how easy it is to do business in the country, it does not have anything to do with the standard of living,” the analyst said. “Georgia might be 11th, 5th or even 1st in the rating, but this does not mean that it takes the same position in terms of standard of living,” he added.

Khaduri reiterated that Georgia’s high rating in Doing Business is important for attracting foreign investors, “however in order for the Georgian economy to develop it is crucial that potential investors, after seeing the ratings, decide to make specific investments in Georgia,” he said.