New economic policy announced by Saakashvili

On December 3 during the opening of the new Lilo customs terminal, President Saakashvili discussed in detail existing relations between the state and entrepreneurs and highlighted their apparent shortcomings. The President used this occasion to declare the starting of a new economic course designed to overcome the existing problems and create a better business environment in Georgia. According to him, the creation of a fair economic environment will enable the awakening of entrepreneurial spirit, which will eventually encourage bringing to life small and medium sized businesses.

The Georgian government is proud that over the last few years it has managed to implement the greatest amount of reforms in Georgia, and as a consequence is achieving high positions in different world rankings and ratings. Despite this, the Georgian population still complains that they live in harsh conditions and many businessmen are frustrated as they feel they are under great pressure from the state. Some businessmen say that it is easy to register and start a business but it is very difficult and dangerous and risky to continue and develop that business.

Doing business has become a dangerous profession, says one of the newspapers. Opposition oriented analysts are sceptical about president’s initiative. They think while the president’s speech contains much rhetoric, in reality conducting business is very different in Georgia as it is mostly controlled by state officials, in particular the ruling elite. Small and medium size business is very subtle in Georgia. There is no legislation protecting such entities, whereas the administration of businesses is becoming stricter. On November 30, parliamentary opposition leadership of the Christian Democratic movement sent a statement to the president urging him to stop state aggression against Georgian businesses.

Maybe Saakashvili’s speech at the Lilo opening ceremony was a kind of response to this document, admitting that there are many discrepancies in relations between state and business.

The President admitted that despite serious progress in recent years in organising a better business environment and combating corruption, there are many shortfalls in the relations of state and businesses, who very often think that they are not listened to properly and that the state is unfair to them, with punishments dished out more severe than a defaulting entrepreneur deserves. So, the entrepreneurs feel that the state is not doing what it should. Many people are disappointed that there is no feeling of stability and thus avoid taking business risks – they do not invest in business development or create new jobs. Many people who would like to and could start a business independently do not because they are scared of facing problems.

There will be a number of new items in the new Tax Code that will be introduced from January 1, 2011. Some changes decreases bureaucracy and minimise the servicing terms. Customs tariffs will decrease as well as time spent on the procedures. Despite the declarations, analysts are sceptical about the possible outcomes of president’s initiative, some even suspect that the administration moves are even stricter, and the situation will be becoming even more complicated. However officials commended the president’s initiative as it promised serious progress in the business environment in Georgia.