The FINANCIAL — An almost 20 percent decrease was observed in registering business in 2012 compared to 2011. Experts say that the reason for the decrease in registering business was due to the elections.
The number of registered business entities in Georgia during the year 2012 reached 43,934 of which 97.3 percent are individual entrepreneurs and 2.7 percent – for-profit entities. In general, decline was observed in registering business entities both for registering individual entrepreneurs as well as for-profit entities over the whole year compared to 2011.
The last month of 2012 also showed decline in the registration of business entities in Georgia. 3,424 new business entities were registered in December of 2012 which is 37 percent less than the same month of the previous year and 0.5 percent less than November according to the Public Registry Service. Among them 95.6 percent are individual entrepreneurs and others – for-profit entities.
As for the number of enterprises registered in December, it decreased by 38.0 percent compared to the same month of the previous year. In contrast, the number of for-profit entities increased by 2.1 percent. The same trend was observed in comparison with the previous month.
“Since the elections the Georgian Government has been changed. Such political activities have a negative impact on the economy in general,” said Tariel Zivzivadze, professional business trainer and consultant. “Businessmen are waiting for what will happen in the political sphere. After the political situation becomes stable the business sector will become more active. I could give an example of interrupted constructions in Tbilisi during the pre-election period. Now, all of them are under construction again,” he added.
“As for 2013, business activities will again depend on political climate. The political environment in Georgia is likely to become seriously strained in the spring and what’s very important is that the country is not experienced in such situations. Whatever happens, the chance of regression is low. Business people already have hope, which is a big force. This force encourages businessmen to start new activities. As creating a better environment for business in one of the main goals of the new government, I hope that business will advance in 2013. I predict that this year the Russian market will become officially opened for Georgia. Also, attention should be paid to developing the agriculture sectors. Positive changes in this direction will also have an important impact on the business sector,” said Zivzivadze.
“Decline in the dynamics of business registration was observed in 2012,” said Irakli Galdava, research fellow at ISET. “The continuation of this dynamic till October was related to the approaching elections and uncertainty in the pre-election period. Usually, business registration increases in September, but there was a very large drop in 2012. This is exactly the period when tension reached its peak before the elections. As for the future changes, the consumer confidence survey made by the ISET Policy Institute shows clearly what conclusions we made. After the election, positive expectation from the population increased but the current situation is being evaluated negatively. Some positive changes have already been noticed from the Government in improving the business sector in the country, such as reducing fines for business for example,” he added.
“Today there is a transitional political situation in Georgia. Business is monitoring the political climate and this is very normal,” said Giorgi Natroshvili, Managing Partner at Tbilisi Business Partner. “As soon as the political situation becomes more stable the business community will increase its activities for sure. As for exporting Georgian wine to Russia it is necessary for the current circumstances to be studied well and for connections to be revived. It is necessary for what has changed over the last 6-7 years to be studied, who has occupied our niche on the Russian market, how the business relations have changed and what business societies both sides have today. It should be noted that the number of businessmen at Russian companies who have western educations and have increased their skills in the west has increased. As for Georgian products, their niche is still free,” he added.
“It is very good that new opportunities are appearing in the agriculture sector. At the same time, it will be better if farmers have an elementary knowledge of economy. For example, farmers abroad are educated in both agriculture and business. All the initiatives will be finished in September. By that time the business community should be ready to implement realistic plans,” Natroshvili said.