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Journal number 4 ∘ Ani Kalandia
Ease of Doing Business Ranking 2020

Summary: Doing Business is part of the World Bank Group's annual report. It is a quantitative indicator of business regulation and Protection of property rights.The report examines regulations that enhance or hinder businessactivities. The article discusses the criteria by which a country is assessed. Main emphasis is on doing business, ways to start a business, bureaucratic measures, reforms, restructuring mechanisms, taxes, levels of corruption, the strength of financial systems. The article highlights the importance of doing business as a powerful instrument that governments can use to create regulatory policies, structural reforms intended to encourage economic growth.

Keywords: Doing business, ranking, top reformer, business indicators, investments.


The World Bank annually establishes ratings and spreads the information about the state of doing business. Ratings are made among 190 countries worldwide. During the last decade, Georgia has made rapid advance.  While back to 2006, Georgia ranked number 112, by 2020 country has moved up to 7th place in the global rankings.

Such huge success of Georgiais even more evident, because Georgian economy is currently ranked as the highestamong the 23 states of Central and Eastern Europe. With this position, the post-Soviet state - Lithuania is ranked 11th after Georgia, and out of its land neighbors with Georgia (Georgia: 83.7 points, New Zealand - 86.8 points), Russia is nearest to the 28th with 5.5 points (Georgia’sother land neighbors, respectively, Turkey - 33rd, Azerbaijan - 34th and Armenia 47th.)

In terms of ease of doing business, Georgia, along with New Zealand, is the state where business registration takes one day. (In New Zealand half day).  On the other hand, registering as an entrepreneur in Georgian reality does not mean starting a business automatically. People may be entrepreneurs, but their activities do not go beyond the registration sheet.

Generally, the successful doing of business also indicates that the growth rate of the products produced by the business sector in Georgia has exceeded 1.5 times the growth rate of the country's GDP in recent years.

Given that economic reforms are an ongoing process, Future of Georgia is easily predictable, not only in terms of indicatorsassociated with doing business, but also in assessments of other institutions and rating agencies - starting with the Global Competitiveness Index and ending with the credit rating of the country. 

In 2005-2012, the country’s main focus was on the desired position in the ratings and some of the reforms were naimed at achieving advanced ranking. That is why The World Bank has twice named Georgia as the leading reform country. Georgia's reforms over the past decade have focused on improving both the institutional and regulatory environment.

A high position in the ranking automatically implies PR of the country's business environment, an attractive place for investors.

The Doing Business Index includes 10 key components that summarize the country's final score and ranking. Georgia has the highest score (99.3) and place (2nd in the world) in the simplicity of starting a business.

Table I.: Ease of doing business Ranking, 2020.


According to the rating Georgia is in the top ten inthe following components:

Starting a business - 2nd position.Property Registration - 5th position.Protection of Minority Investor Rights – 7th position.

It is noteworthy that according to the ratings, Georgia's scores did not decrease in comparison with the previous year. On the contrary, it improved or maintained.

Table II. Ranking on Doing Business Topics (1-190) - Georgia


What Do Business Indicators Measure?

A) business regulation, protection of property rights and their importance to business, especially for small and medium-sized enterprises;

(B) the degree of regulation, such as the number of procedures required for starting, registering and transferring business rights;

(C) indicators that determine the severity of taxes on business. 

List of research components and reforms implemented by the Government of Georgia.

Starting a business

According to this component, Georgia ranks 2nd in the rating. This indicator improved by 0.2 points compared to the previous year. New Zealand is in the first place, where it takes only half a day to complete a business and requires one procedure.

Voluntary registration of VAT for business was facilitated by business in 2019. Georgia has also expanded its existing “one-stop shop” for businesses and enabled entrepreneurs to start their business in one go. 

Dealing with construction permits

Georgia is in the 21st position in the building permit component. The index increased by 1.7 points compared to the score in 2019.

In 2016, the construction permit procedure was simplified with the possibility of issuing a permit in a short time.

Georgia has improved the quality of construction permits in terms of building permits by providing information publicity. 

Getting Electricity

42nd position.

In 2013, the system for connecting electricity to the grid was refined, the process of connecting new customers to the distribution network was simplified and the connection fee reduced.

In 2017, electricity supply stability has improved, as penalties have been imposed for exceeding the established cut-off rate (SAIDI) and the cut-off for exceeding the established cut-off frequency (SAIFI), at these point consumers are constantly informed of the planned power outages. 

Registering Property

5th position.

In 2017, land administration was improved in Tbilisi by marking privately owned plots on the maps.


Protecting Minority Investors

7th position.

In 2017, Georgia ensured the protection of small investors by the degree of their shareholder rights and their involvement in corporate decision-making process. It was clearly defined ownership and control structures.

Whatever the state needs to create a sophisticated and investor-friendly law, investors see the political stability of the country as primarily a guarantee of their protection. 

Getting Credit

15th position.

Getting a loan involves the legal procedures that accompany the borrowing and at the same time the availability of detailed credit information.

This is a very important criterion, because despite the abundance of business entities, they need the initial financial resources, start-up capital to build a business. In Georgia, time-consuming, lengthy and complex procedures are required to issue a loan, and this is accompanied by the high cost of credit resources.

In 2013, Georgia strengthened its secured transaction system by amending the Civil Code, which resulted in the spread of the right to sell products and the replacement of collateral.

The introduction of the Law on Personal Data in 2014 improved the credit information system. 

Paying taxes

It is noteworthy to advance the country by 2 positions in the indicator of payment of taxes, where Georgia took the 14th place.

It is no longer mandatory to register value added tax when merging companies, which has improved the start-up component;

Since 2013, the population has been able to pay taxes using an electronic system and additional services have been introduced for taxpayers. In 2017, the Supplement to the Income Tax Declaration was abolished and improved the efficiency of the online system for filing VAT returns.

In 2019, the World Bank positively assessed the tax reform implemented by the Government of Georgia. Specifically, with the amendment to the Tax Code, which came into force on January 1, 2017, retained earnings were exempt from income tax, which is a source of reinvestment. As a result of this reform, the share of total tax burden on gross profit decreased significantly. Also, business time to pay taxes has been reduced.

Georgia advanced by 2 positions in the indicator of payment of taxes. This positive trend was driven by two factors: first, the ease of administering the tax system and second, creating a comfortable environment for taxpayers. The state's attitude towards business has been complimentary in recent years, reducing the time required for tax reporting.

A major advance in the tax component has been the ease of administration of the tax system, including VAT reform. This has led to a reduction in the time required for tax reporting. Less time means vacant resources and new opportunities to introduce innovative approaches that will support the development of Georgian companies. 

Trading Across Borders

45th position. The index has improved by 0.1 points compared to the previous year.

The reforms implemented in the country in the field of international trade have received a positive assessment. In order to facilitate international trade, border procedures have been simplified, which is a prerequisite for exporting local produce to international markets.

In 2013, an economic clearance zone was created, which made it possible to reduce the time needed for export and import.

In 2017, the electronic processing system was improved, accelerating the process of submitting export and import documents. The possibility of submitting preliminary electronic documents was also introduced. 

Enforcing contracts

12th position.

In 2013, contract enforcement was simplified by expediting commercial litigation.

In 2016, contract enforcement was simplified by an electronic appeals system, and in 2019, Georgia introduced an automatic, random procedure for the distribution of cases to judges.

This improved the quality of trials and, as a result, the country's score on the 18-point scale of judicial quality improved from 12.5 to 13.0. 

Resolving Insolvency

Georgia is at the lowest position with business closure procedures, with 64 out of 190 countries. However, compared to previous years, the situation is slightly improved by 0.2 points.

In 2013, Georgia made effective changes to its insolvency filing process.

In 2018, both the creditor and debtor's authority increased in the process of insolvency proceedings; The process of insolvency proceedings continues to provide essential goods / services for the continuity of the debtor's business. In addition, the opportunity for creditors to participate in insolvency proceedings has increased. 


In general, the business environment is very complex and it is quite difficult to evaluate it together with the components of doing business. When it comes to attracting investment and economic growth, it is important to consider that any component of a country's life is a business environment with varying levels of influence. For example, in 2017-2018, the economies of Ethiopia, Cote d'Ivoire, and Bangladesh were the fastest growing among the approximately 200 countries worldwide. By the rankings of doing business, Ethiopia is at 159th, C -te d'Ivoire at 122th, and Bangladesh at 176th place. This example shows that the above mentioned countries are poorer than Georgia, but the labor force is cheaper there, and it is not surprising that cheap labor attracts foreign investment. In those countries, if the componentsreflected in doing business ranking were also attractive, they would have developed even faster.

Thus, a high position in the components of the Doing Business Index may imply rapid economic development in the country, although this factor is insufficient for economic growth. The 7th place for Georgia is certainly a great achievement, especially given that the US is directly ahead of this indicator, followed by the United Kingdom. The index is intended to assess the burden of bureaucratic procedures, the burden of regulations on doing business. The index does not take into account various factors such as: political stability, threat from the occupier country, level of corruption and education, rule of law and more.

In order to do business, it is good to be in an advanced position, though there must be locally qualified workforce that the country can use. As the above index tells us, an inadequately trained workforce is the number one problem for business development in our country.

The Government of Georgia should definitely focus on improving insolvency and business closure mechanisms, as by these components we have the lowest position in the rating. In order to make business function effectively and increase competitiveness, the process of closing a business should also be simplified along with the simplicity of starting a business. By increasing private sector productivity, simplifying the business closure process makes it possible to transfer companies from less efficient areas to more productive ones and thus increase competition in the market. The government should tailor administrative procedures to the interests of business entities, and refine the legislation and enforcement mechanisms associated with closing the business. Also, appropriate measures should be taken to meet the creditors' demand.

In order to improve the investment and business environment, the Government of Georgia should constantly strive to develop updated legislative initiatives and administer ongoing reforms to ensure effective implementation of reforms.

The government's tax policy focuses on creating an attractive and stable tax environment for investors to start and develop businesses. Within the framework of the EU-Georgia Free Trade Agreement, it is planned to bring the customs legislation into line with EU legislation.

The breakthrough in the World Bank's ratings indicators reinforces assessments made by other international organizations that Georgia is considered one of the most successful reformer country. At the same time, the ongoing systemic reforms in the country clearly outline the prospects of further strengthening the international position of the country in the near future, which naturally has a positive impact on increased investment flows, employment and economic growth. 




Report prepared by the Ministry of Economy and Sustainable Development - Doing Business 2019, Tbilisi, 2019http://www.economy.ge/

Chokheli K., "Georgia is seventh among 190 countries in the 2020 Ease of Doing Business", Tbilisi, 2019.

Archvadze, I.,: „No other country in the world has made such a rapid advance!“ Tbilisi, 2019.

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Tsutskiridze c, 2019. : During its 14-year Country Rating, the World Bank rated Georgia’s business start-up as the bestfor the first time.