Most of the fifteen post-Soviet countries are graveyards when it comes to private sector growth. Azerbaijan, Kazakhstan, and Russia heavily rely on extracting natural resources controlled by the state.
On the other hand, countries like Armenia, Kyrgyzstan, and Moldova face challenges with internal instability and corruption. Only a few countries, such as the Baltic trio, have managed to achieve economic success.
Then, there’s Georgia.
During the 1990s, this small South Caucasus republic was on the path toward suffering the same fate as many of its post-Soviet neighbors. Above all, war and corruption hampered the new leadership’s efforts at building a functioning market economy. Fortunately, the 2003 Rose Revolution brought in new leaders who were more focused on the market and positive change.
Georgia’s private sector soon began taking off.
Foreigners who live and work in Tbilisi or the Black Sea port of Batumi can’t help but be impressed by the new construction projects and business ventures that sprout up seemingly everywhere. Just a few years ago, getting a decent restaurant meal in Tbilisi was an ordeal.
Today, you can’t step outside without absorbing the hustle and bustle of a city and country on the rise.
The World Bank’s Ease of Doing Business Index provides tangible support for the optimism.
In 2023, Georgia ranks 7th in the world before the United Kingdom. The 2016 report singled out Georgia as making the most impressive economic improvement of any country since 2003.
GDP per capita rose by 31.94% between 2021 and 2022. Plus, annual business density — defined by the number of newly registered businesses more than tripled.
Georgia has made immense progress in the past twenty years, but the country isn’t relying on its past success. It came 7th in the world on ease of doing business. What’s more, it topped business-friendly locales such as Poland, The Netherlands, and Switzerland with far lower production and living costs.
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Georgia’s One Of The Easiest Places For Doing Business
Specific sectors in which Georgia performed especially well were ease of starting a business and ease of registering property. Georgia was consistently recognized as one of the top 10 improvers for three consecutive cycles in the Doing Business rankings.
The ease of doing business score evaluates how well an economy adheres to regulatory best practices across a range of indicators. This analysis includes 41 indicators across 10 Doing Business topics. When it comes to starting a business, Georgia comes in second place to New Zealand, topping the ranking for having the fewest number of required procedures.
In Georgia, it famously takes only two days to register a new business, there are only two procedures, and the standard registration fee is only 100 GEL, or about $38. Furthermore, government-implemented reforms have made doing business in Tbilisi and other parts of Georgia even easier.
Georgia also deserves kudos for introducing an electronic filing system for commercial court claims. Filing online — bypassing the shuffling back and forth through the complicated web of offices and agencies you find in many other countries — means that claims are more easily filed with lower costs and a quicker processing time.
Georgia’s reform on issuing permits for new construction projects is also worth noting. The official wait time to receive a decision on a permit application is around ten days, boosting already strong property markets in Tbilisi and the Black Sea coast.
Success in Perspective
Georgia’s star performance in the latest edition of Doing Business is nothing new.
Georgia’s overall score of 83.7 out of 100 is significantly higher than the OECD high-income economy average of 78.4 and the global average of 63.
Before you start wondering whether Georgia’s current government isn’t as business-friendly as you’ve been led to believe, think again.
Georgia may have fallen slightly on the ranking, but that doesn’t mean its performance has decreased. Instead, it means that more developing countries around the world are implementing pro-business policies — or at least policies that look good according to the World Bank’s criteria.
Why You Should Start an Offshore Company in Georgia
Georgia’s business-friendly approach to governance has made it a popular destination for foreign direct investment of all sorts. The combination of streamlined regulations, minimal bureaucratic red tape, a flat tax regime, and low costs for labor and other production inputs makes it a lucrative business destination, especially for those making investments in the service industry.
Georgia has no minimum capital requirement for registering a business and no restrictions on the purchase of land by non-citizens. Those looking to start a business of any size can look forward to fertile ground. Best of all, large-scale improvements over the past 20 years have not made the authorities complacent.
The World Bank’s report for June 2023 shows that Georgia’s economy has been strong, with a 7.3% growth in the first four months of 2023. The services sector has primarily driven this growth, and the country’s economy is expected to stabilize at around 5% in the medium term.
Lower international commodity prices and the strengthening of the national currency, the Lari, have also led to a significant drop in inflation. Expectations are that Georgia’s business environment will continue to improve in the future.
If you think Georgia might be the right place for you to establish your residence, start your business, or invest in real estate, consider applying to become a client with us.
