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GEORGIA'S TIGER ECONOMY?
By Christina Tashkevich
The Messenger
September 12, 2006 Issue
The World Bank's Roy Southworth,
Prime Minister Zurab Noghaideli
and report author Simeon Djankov
After a World Bank and the International Finance Corporation (IFC)
report named Georgia the top global reformer of 2006, the government
plans to continue to work its way up the list of easy-to-do-business
countries.
The author of the report Simeon Djankov, who is currently in Tbilisi
to present his findings, said on Monday that Georgia has made the
biggest jump seen by any country since the report was launched four
years ago: from 112th place last year to 37th this year.
Djankov was hopeful that Georgia could be able to repeat the success
of Singapore and Korea, who made an incredible progress in the last
few decades.
He said Georgia improved in six of ten areas studied in the Doing
Business report.
The report looks specifically at construction licenses and
permits. Georgia this year created a one-stop shop for building
licenses. The government also introduced shorter time limits for the
issuance of permits. "As a result, compliance with building regulations
in Tbilisi is as easy as in Hong Kong," the report's conclusion says.
The report also notes the Supreme Court can now decide which cases to
review. Previously it dealt with every case sent by the lower courts.
Djankov noted the new labour code as one of the best of the country's
reforms. The new law provides for one month's severance pay, replacing
several complex rules. Georgia also reduced the social security
contributions paid on wages by businesses from 31 to 20 percent.
According to the report, these changes make Georgia the sixth easiest
place to employ workers globally.
Prime Minister Zurab Noghaideli proudly said on Monday that the IFC
called Georgia's labour reform among three best reforms in the world.
The prime minister pointed out that it has become easier to start a
business in Georgia. "Georgia reduced the minimum capital required
to start a new business from GEL 2000 to 200," he said. As a result,
business registrations rose by 55 percent in 2006 compared with
last year.
However, World Bank's experts also say "there is a considerable room
for improvement" in several areas.
In the ease of paying taxes, Georgia ranks only 104. A company
still takes about 53 days per year to pay taxes. Georgia is poorly
ranked in regards to closing a business and here the experts call
for bankruptcy reform. However, the prime minister said a new law on
bankruptcy would be enacted by the end of the year.
Regarding trading across borders Georgia is ranked at 95, due to
a relatively high cost to import and export, and a large number of
required procedures.
Finally Georgia ranks only 135 on protecting investors, lower than
most of its CIS neighbours.
Other countries in the list of global top performers include Romania,
Mexico, China, France, Croatia, and Tanzania. Within the CIS, Armenia,
Azerbaijan, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Russia,
and Ukraine each implemented at least one reform to make it easier
doing business. Tajikistan had no reforms and Uzbekistan made it even
harder to do business.
The prime minister said on Monday that in 2005 the Georgian government
had a goal to be among the fifty countries where it is easy to do
business. "This promise was kept. Next year we have a new task:
to be in the top twenty-five countries," he said.
By Christina Tashkevich
The Messenger
September 12, 2006 Issue
The World Bank's Roy Southworth,
Prime Minister Zurab Noghaideli
and report author Simeon Djankov
After a World Bank and the International Finance Corporation (IFC)
report named Georgia the top global reformer of 2006, the government
plans to continue to work its way up the list of easy-to-do-business
countries.
The author of the report Simeon Djankov, who is currently in Tbilisi
to present his findings, said on Monday that Georgia has made the
biggest jump seen by any country since the report was launched four
years ago: from 112th place last year to 37th this year.
Djankov was hopeful that Georgia could be able to repeat the success
of Singapore and Korea, who made an incredible progress in the last
few decades.
He said Georgia improved in six of ten areas studied in the Doing
Business report.
The report looks specifically at construction licenses and
permits. Georgia this year created a one-stop shop for building
licenses. The government also introduced shorter time limits for the
issuance of permits. "As a result, compliance with building regulations
in Tbilisi is as easy as in Hong Kong," the report's conclusion says.
The report also notes the Supreme Court can now decide which cases to
review. Previously it dealt with every case sent by the lower courts.
Djankov noted the new labour code as one of the best of the country's
reforms. The new law provides for one month's severance pay, replacing
several complex rules. Georgia also reduced the social security
contributions paid on wages by businesses from 31 to 20 percent.
According to the report, these changes make Georgia the sixth easiest
place to employ workers globally.
Prime Minister Zurab Noghaideli proudly said on Monday that the IFC
called Georgia's labour reform among three best reforms in the world.
The prime minister pointed out that it has become easier to start a
business in Georgia. "Georgia reduced the minimum capital required
to start a new business from GEL 2000 to 200," he said. As a result,
business registrations rose by 55 percent in 2006 compared with
last year.
However, World Bank's experts also say "there is a considerable room
for improvement" in several areas.
In the ease of paying taxes, Georgia ranks only 104. A company
still takes about 53 days per year to pay taxes. Georgia is poorly
ranked in regards to closing a business and here the experts call
for bankruptcy reform. However, the prime minister said a new law on
bankruptcy would be enacted by the end of the year.
Regarding trading across borders Georgia is ranked at 95, due to
a relatively high cost to import and export, and a large number of
required procedures.
Finally Georgia ranks only 135 on protecting investors, lower than
most of its CIS neighbours.
Other countries in the list of global top performers include Romania,
Mexico, China, France, Croatia, and Tanzania. Within the CIS, Armenia,
Azerbaijan, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Russia,
and Ukraine each implemented at least one reform to make it easier
doing business. Tajikistan had no reforms and Uzbekistan made it even
harder to do business.
The prime minister said on Monday that in 2005 the Georgian government
had a goal to be among the fifty countries where it is easy to do
business. "This promise was kept. Next year we have a new task:
to be in the top twenty-five countries," he said.