2010: Doing Business

World Bank Group

Since 2004 Doing Business has been tracking regulatory reforms aimed at improving the ease of doing business. Despite the challenges presented by the financial crisis, the number of reforms hit a record level this year. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Reformers focused on making it easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.

Business regulation can affect how well small and midsize firms cope with the crisis and seize opportunities when recovery begins,” said Penelope Brook, Acting Vice President for Financial and Private Sector Development for the World Bank Group. “The quality of business regulation helps determine how easy it is to reorganize troubled firms to help them survive difficult times, to rebuild when demand rebounds, and to get new businesses started.

Georgia eased the process for dealing with construction permits by introducing a simplified process for obtaining confirmation from utilities, a risk-based approval process for building permits, and new time limits for the occupancy certificate. The documentation requirements for import and export were simplified, and there was a significant decrease in the cost of trade.

Economies are ranked on their ease of doing business, from 1 – 183, with first place being the best. A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business. This index averages the country’s percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings are from the Doing Business 2010 report, covering the period June 2008 through May 2009.

Areas of Reform: Dealing with construction permits, Trading across borders
Rank in Doing Business 2010: 11

Economic Data

Compare economies by income per capita, and population.

Georgia

Region: Eastern Europe & Central Asia
Income category: Lower middle income (Visit the law library)
Population: 4,364,460
GNI per capita (US$): 2,471.88
Download country report
Enterprise Surveys snapshot
Ease of… Doing Business 2010 rank Doing Business 2009 rank Change in rank
Doing Business 11 16 +5
Starting a Business 5 5 0
Dealing with Construction Permits 7 9 +2
Employing Workers 9 10 +1
Registering Property 2 2 0
Getting Credit 30 27 -3
Protecting Investors 41 38 -3
Paying Taxes 64 112 +48
Trading Across Borders 30 85 +55
Enforcing Contracts 41 42 +1
Closing a Business 95 95 0

Note: Doing Business 2009 rankings have been recalculated to reflect changes to the methodology and the addition of two new countries.

Starting a Business

DB10 rank: 5 >> DB09 rank: 5 >> Change in rank: –

The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Procedures (number) 3 6.7 5.7
Time (days) 3 17.4 13.0
Cost (% of income per capita) 3.7 8.3 4.7
Min. capital (% of income per capita) 0.0 21.5 15.5

Dealing with Construction Permits

DB10 rank: 7 >> DB09 rank: 9 >> Change in rank: +2

Shown below are the procedures, time, and costs to build a warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections, and obtaining utility connections.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Procedures (number) 10 22.6 15.1
Time (days) 98 264.2 157.0
Cost (% of income per capita) 21.6 536.9 56.1

Employing Workers

DB10 rank: 9 >> DB09 rank: 10 >> Change in rank: +1

The difficulties that employers face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Difficulty of hiring index (0-100) 0 31.9 26.5
Rigidity of hours index (0-100) 20 29.9 30.1
Difficulty of redundancy index (0-100) 0 25.9 22.6
Rigidity of employment index (0-100) 7 29.2 26.4
Redundancy costs (weeks of salary) 4 27.8 26.6

Registering Property

DB10 rank: 2 >> DB09 rank: 2 >> Change in rank: –

The ease with which businesses can secure rights to property is shown below. Included are the number of steps, time, and cost involved in registering property.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Procedures (number) 2 5.7 4.7
Time (days) 3 59.7 25.0
Cost (% of property value) 0.0 2.2 4.6

Getting Credit

DB10 rank: 30 >> DB09 rank: 27 >> Change in rank: -3

Measures on credit information sharing and the legal rights of borrowers and lenders are shown below. The Legal Rights Index ranges from 0-10, with higher scores indicating that those laws are better designed to expand access to credit. The Credit Information Index measures the scope, access and quality of credit information available through public registries or private bureaus. It ranges from 0-6, with higher values indicating that more credit information is available from a public registry or private bureau.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Strength of legal rights index (0-10) 6 6.6 6.8
Depth of credit information index (0-6) 6 4.0 4.9
Public registry coverage (% of adults) 0.0 9.7 8.8
Private bureau coverage (% of adults) 12.2 19.4 59.6

Protecting Investors

DB10 rank: 41 >> DB09 rank: 38 >> Change in rank: -3

The indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Extent of disclosure index (0-10) 8 6.1 5.9
Extent of director liability index (0-10) 6 4.3 5.0
Ease of shareholder suits index (0-10) 4 6.1 6.6
Strength of investor protection index (0-10) 6.0 5.5 5.8

Paying Taxes

DB10 rank: 64 >> DB09 rank: 112 >> Change in rank: +48

The data below shows the tax that a medium-size company must pay or withhold in a given year, as well as measures of the administrative burden in paying taxes. These measures include the number of payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the percentage of their profits they must pay in taxes.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Payments (number per year) 18 46.3 12.8
Time (hours per year) 387 336.3 194.1
Profit tax (%) 13.3 10.9 16.8
Labor tax and contributions (%) 0.0 23.1 24.4
Other taxes (%) 2.0 9.4 3.3
Total tax rate (% profit) 15.3 43.4 44.5

Trading Across Borders

DB10 rank: 30 >> DB09 rank: 85 >> Change in rank: +55

The costs and procedures involved in importing and exporting a standardized shipment of goods are detailed under this topic. Every official procedure involved is recorded – starting from the final contractual agreement between the two parties, and ending with the delivery of the goods.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Documents to export (number) 4 6.5 4.3
Time to export (days) 10 26.8 10.5
Cost to export (US$ per container) 1,270 1,581.8 1,089.7
Documents to import (number) 4 7.8 4.9
Time to import (days) 13 28.4 11.0
Cost to import (US$ per container) 1,250 1,773.5 1,145.9

Enforcing Contracts

DB10 rank: 41 >> DB09 rank: 42 >> Change in rank: +1

The ease or difficulty of enforcing commercial contracts is measured below. This is determined by following the evolution of a payment dispute and tracking the time, cost, and number of procedures involved from the moment a plaintiff files the lawsuit until actual payment.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Procedures (number) 36 37.1 30.6
Time (days) 285 450.9 462.4
Cost (% of claim) 29.9 25.6 19.2

Closing a Business

DB10 rank: 95 >> DB09 rank: 95 >> Change in rank: –

The time and cost required to resolve bankruptcies is shown below. The data identifies weaknesses in existing bankruptcy law and the main procedural and administrative bottlenecks in the bankruptcy process. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is also shown.

Indicator Georgia Eastern Europe & Central Asia OECD Average
Time (years) 3.3 2.9 1.7
Cost (% of estate) 4 13.5 8.4
Recovery rate (cents on the dollar) 27.9 31.6 68.6
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