07TBILISI2451, GEORGIA GETS IMPROVED RANKINGS ON BUSINESS

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Reference ID Created Released Classification Origin
07TBILISI2451 2007-10-01 10:01 2011-08-30 01:44 UNCLASSIFIED Embassy Tbilisi

VZCZCXRO3186
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSI #2451/01 2741001
ZNR UUUUU ZZH
R 011001Z OCT 07
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 7786
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 TBILISI 002451 
 
SIPDIS 
 
STATE FOR EUR/CARC, EB/CBA AND EB/TPP/BTA 
COMMERCE FOR 4231 DANICA STARKS 
STATE PASS USTR 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV PROV GG
SUBJECT: GEORGIA GETS IMPROVED RANKINGS ON BUSINESS 
CLIMATE AND CORRUPTION 
 
1. Summary:  The annual report of the International 
Financial Corporation (World Bank Group) has moved 
Georgia up from thirty-seventh to eighteenth place out 
of 178 surveyed countries in terms of ease of doing 
business.  Georgia is the fifth top reformer country on 
the list.  An annual report by Transparency International 
also shows a substantial improvement for Georgia on the 
corruption Perception Index.  End Summary. 
 
Georgia Enters the Top 20 
------------------------- 
 
2. On September 26, the International Financial 
Corporation released its annual Doing Business report, 
which provides objective measures of business regulations 
and their enforcement across 178 countries and is a guide 
for evaluating regulations that directly impact economic 
growth.  In terms of economic reforms over the past year 
that promote the business environment, Georgia is ranked 
fifth after Egypt, Croatia, Ghana, and FYR Macedonia. 
This is Georgia's third straight year in the top five in 
this category: last year Georgia ranked as the top 
reformer, and was number two in 2005. 
 
3. Georgia moved up significantly in the overall ranking 
of countries for ease of doing business, leaping from 
thirty seventh to eighteenth place.  Estonia, ranked 
seventeenth, is the only former Soviet country ahead of 
Georgia.  For comparison, Latvia is number 22, 
Lithuania - 26, Armenia - 39, Azerbaijan - 156, 
Russia - 166. 
 
Specific Achievements 
---------------------- 
 
4. The report says Georgia's improved ranking is due to 
reforms in six areas.  Georgia strengthened investor 
protections, including through amendments to its 
securities law that eliminated loopholes that had allowed 
corporate insiders to expropriate minority investors.  It 
adopted a new insolvency law that shortens timelines for 
reorganization of a distressed company or disposition of a 
debtor's assets.  Georgia sped up approvals for 
construction permits and simplified procedures for 
registering property.  It made starting a business easier 
by eliminating the paid-in capital requirement.  In 
addition, the country's private credit bureau added 
payment information from retailers, utilities, and trade 
creditors to the data it collects and distributes. 
 
5. The report credits Georgia for easing the entry of new 
firms.  Georgia now has 15 registered businesses per 100 
people (the same rate as Malaysia).  It also emphasizes 
the three boldest reforms, driving the biggest 
improvements in the Doing Business indicators, including 
an increase in investor protection.  As the report puts 
it, "Georgia made investing safer.  Amendments to its 
securities law eliminated loopholes that allowed corporate 
insiders to expropriate minority investors.  Reformers 
increased disclosure requirements for directors' conflicts 
of interest, detailed stricter duties to the firm for 
directors, and heightened penalties for self-dealing." 
Georgia also improved in regard to licensing practices. 
 
Georgia Improves in Transparency International's CPI Index 
--------------------------------------------- ------------- 
 
6. On September 26, Transparency International, the global 
civil society organization leading the fight against 
corruption, published the results of the Corruption 
Perception Index (CPI) 2007.  Georgia received 3.4 points 
(out of a total ten), ranking seventy-ninth among 180 
countries.  The CPI ranks countries in terms of the degree 
to which businesspeople and country analysts, resident and 
non-resident, perceive corruption to exist in the public 
and political sectors. 
 
7. Georgia's score this year is a significant improvement 
over the score in 2006 (2.8).  Since the Rose Revolution, 
Georgia's score has steadily risen, starting at 1.8 in 
2003.  This year's gain means that Georgia has moved out 
of the group of countries considered to have a rampant 
corruption problem (those under 3.0).  In comparison with 
countries of the former Soviet Union, it ranks well ahead 
of Azerbaijan (2.1) and Armenia (3.0), and is in fourth 
place, behind Latvia (4.8), Lithuania (4.8) and Estonia 
(6.5) out of 15 countries listed in this category. 
 
TBILISI 00002451  002 OF 002 
 
 
Nevertheless, a score of 3.4 still indicates that 
corruption is a significant problem in the public sector. 
 
TEFFT

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