GEORGIA Country Profile

Licences, Infrastructure and Public Utilities

Individual Corruption

Citizens in Georgia report corruption in connection with the registration service. Some observers report that poor citizens would rather avoid places like birth registration offices because they are afraid that they will not be able to pay the bribe for that service. These observations are supported by the Transparency International Global Corruption Barometer 2007, which shows that registry and permit services have problems with corruption. However, according to Transparency International's Global Corruption Barometer 2009, only 1% of households report paying bribes to registry and permit services in previous year.

Business Corruption

Licensing requirements and procedures have been streamlined and have drastically improved since 2004. Business executives interviewed in the World Economic Forum Global Competitiveness Report 2009-2010 identify Georgia as one of the least burdensome economies in the world in relation to government regulation (permits, regulations, reporting). The reduction in the level of corruption in connection with obtaining licences and permits is due mainly to government initiatives that drastically simplify the procedures and number of licences needed to operate a company in Georgia. However, companies should be aware that obtaining licences or permits can still entail demands for bribes. According to the World Bank Anticorruption in Transition 3 2006, corruption was encountered most frequently in connection with obtaining licences. Global Integrity 2008 reports that business licensing and regulation continues to be 'very weak' in Georgia. It is reported that there is a lack of transparency in business licensing areas, such as health and safety, and that inspections by government officials are not carried out in a uniform or even-handed manner. In 2008, Zaza Koplatadze, the deputy head of the medical regulation board at the Ministry of Health, Labour and Social Affairs and Malkaz Kokichashvili, the founder of a private ophthalmology and neurology centre were imprisoned as a result of receiving and offering bribes of USD 1,500 respectively. An additional illegal monthly transfer of USD 2,900 was also made from Kokichashvili to Koplatadze in order to obtain quick and permanent import licences for the private medical centre. In 2008, both men were facing sentences between 7 to 11 years in prison.

Political Corruption

Despite enormous progress, Georgia still witnesses cases of corruption at high levels. Officials in the State Pension Fund were charged with embezzling GEL 570,000 worth of funds in 2006. A number of politicians were also exposed when the media revealed that they applied for funding from the Georgian Unified State Fund for Social Insurance to cover their private and very expensive medical bills.

Frequency

The World Bank & IFC: Doing Business 2010:
- In order to construct a warehouse, a company must undertake 10 procedures and spend 98 days to obtain the required licences and permits at a cost of 21.6% of GNI per capita.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give government administrative requirements (permits, regulations, reporting) in Georgia a score of 4.8 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all').

Transparency International: Global Corruption Barometer 2009:
- 1% of households who had contact with registry and permit services in 2008 report to have paid a bribe.

- 2% of households who had contact with medical services in 2008 report to have paid a bribe.

The World Bank & IFC: Enterprise Surveys 2008:
- Nearly 11% of companies surveyed identify business licensing and permits as a major business constraint.

- Slightly more than 4% of companies report that they expect to make informal payments to public officials to get things done.

- 3.5% of companies expect to give gifts in order to obtain an operating licence.

- 3.9% of companies expect to give gifts to get a construction permit.

- Less than 0.5% of companies surveyed expect to give gifts to obtain an electrical or telephone connection; however, slightly more than 9% expect to do so in order to obtain a water connection.

Transparency International: Global Corruption Barometer 2007:
- Citizens give public utilities a score of 2.4 and registry and permit services a score of 2.5 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

EBRD & World Bank: BEEPS Georgia 2005:
- 7% of companies surveyed report having to make frequent bribes for business licences (down from 20% in 2002).