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2008 Assessment

Georgia: Integrity Indicators Scorecard

Georgia: Integrity Scorecard Report > Sub-Category: Business Licensing and Regulation
Indicators   Score
70 Are business licenses available to all citizens? 75
71 Are there transparent business regulatory requirements for basic health, environmental, and safety standards? 0
72 Does government effectively enforce basic health, environmental, and safety standards on businesses? 0

Indicator and sub-Indicator Details

70 Are business licenses available to all citizens?
 
  70a: In law, anyone may apply for a business license.
 
Score: YES  NO score
  Comments: No discrimination policy might be exercised.

References: Constitution of Georgia; Law on Licenses and Permissions, 2005

  70b: In law, a complaint mechanism exists if a business license request is denied.
 
Score: YES  NO score
  Comments:

References: Constitution of Georgia, art 42 Administrative Procedure Code; rules on challenging decisions of administrative bodies;

  70c: In practice, citizens can obtain any necessary business license (i.e. for a small import business) within a reasonable time period.
 
Score: 100  75  50  25  0  score
  Comments: The law stipulates a three-month-period for obtaining a license; the appropriate state agencies can add another three months before they issue the license. The process has been simplified significantly in recent years.

References: Law on Licenses and Permissions, art. 10

Peer Review Comments: Georgia has dramatically reduced the hurdles to starting a business. A three-to-sixth month period is also relatively short in comparison to even industrialized countries, (e.g., Germany and Italy).

  70d: In practice, citizens can obtain any necessary business license (i.e. for a small import business) at a reasonable cost.
 
Score: 100  75  50  25  0  score
  Comments: Cost is not high.

References: There have been no reports on the issue. All costs are defined by the Law on Dues for Licenses and Permissions from 2003

71 Are there transparent business regulatory requirements for basic health, environmental, and safety standards?
 
  71a: In law, basic business regulatory requirements for meeting public health standards are transparent and publicly available.
 
Score: YES  NO score
  Comments: There are no clear rules on health requirements. It is one of the sources of corruption in Georgia.

References: Law on Licenses and Permissions, 2005 Law on Medical and Pharmaceutical Licensing, 2003

  71b: In law, basic business regulatory requirements for meeting public environmental standards are transparent and publicly available.
 
Score: YES  NO score
  Comments: There are no clear rules on health requirements. They are non-predictable and non-transparent and depend on a vision of individual ministers of deputies.

References: Law on Licenses and Permissions, 2005

  71c: In law, basic business regulatory requirements for meeting public safety standards are transparent and publicly available.
 
Score: YES  NO score
  Comments: There are no clear rules on health requirements.

References: Law on Licenses and Permissions, 2005

72 Does government effectively enforce basic health, environmental, and safety standards on businesses?
 
  72a: In practice, business inspections by government officials to ensure public health standards are being met are carried out in a uniform and even-handed manner.
 
Score: 100  75  50  25  0  score
  Comments: They cannot be performed in a uniform manner, as there is no uniform regulation. Rules and procedures vary from one region to another. The problem is the selective nature of inspections. Most often than not they are initiated for pressing businessmen with different purposes: extortion of money for the party, transfer of property to other people more loyal to the government, or, as it was the case with Mr. Vazagashvili, simply for making his life harder. He is the father of young man brutally killed by the police in the middle of the day. As the incident sparred a lot of public outrage, the government decided to go after his father and silence him.

References: See reports of the Public Defender of Georgia, 2007, and first half of the 2008, about misuse of power. See media reports on inspection at the shops of Mr.Vazagashvili, spring 2008

  72b: In practice, business inspections by government officials to ensure public environmental standards are being met are carried out in a uniform and even-handed manner.
 
Score: 100  75  50  25  0  score
  Comments: They cannot be performed in a uniform manner, as there is no uniform regulation. There is no transparency in regulations. There have been no reports of regular inspections. There is very little in the way of comprehensive statistics or studies of such inspections. The case of the wine makers from 2006 is still under investigation. They were fined and their property confiscated due to the violation of sanitary, environmental and some administrative regulations.

References: There have been no media reports.

  72c: In practice, business inspections by government officials to ensure public safety standards are being met are carried out in a uniform and even-handed manner.
 
Score: 100  75  50  25  0  score
  Comments: They cannot be performed in a uniform manner, as there is no uniform regulation. Rules and procedures vary from one region to another. The problem is the selective nature of inspections. Most often than not they are initiated for pressing businessmen with different purposes: extortion of money for the party, transfer of property to other people more loyal to the government, or, as it was the case with Mr. Vazagashvili, simply for making his life harder. He is the father of young man brutally killed by the police in the middle of the day. As the incident sparred a lot of public outrage, the government decided to go after his father and silence him.

References: See reports of the Public Defender of Georgia from 2007 and the first part of 2008

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