Georgia tops business reform list

The World Bank praised Georgia for its positive attitude to business

Georgia has made more progress in making itself "business-friendly" than any other country in the past year, according to a World Bank report.

Government reforms have made it easier to start businesses, obtain credit, hire staff and enforce contracts there.

Romania, Mexico and China have also made significant strides in creating more conducive conditions for business, its Doing Business report found.

The Democratic Republic of Congo came bottom of the list.

Cutting the burden

In its fourth annual report on business regulations, the World Bank found that Georgia had made the most effort to reduce the burden on existing companies and help new businesses.

As a result, it has leapt from 112th position to 37 in the World Bank's league table measuring the ease of doing business - ahead of both Italy and Spain.

MOST BUSINESS FRIENDLY COUNTRIES 1: Singapore (2) 2: New Zealand (1) 3: United States (3) 4: Canada (4) 5: Hong Kong (6) 6: United Kingdom (5) Source: World Bank - Doing Business Report 2007 (2006 positions in brackets)

Under President Mikhail Saakashvili, Georgia has reduced the amount of capital needed to launch a business, reformed customs procedures and overhauled the process for settling legal disputes.

Changes to labour regulations have also made it easier for business to hire workers, while social security charges have been cut.

Despite that, a more efficient corporation tax system means the tax take has risen by more than 300%.

Romania also scored highly, by simplifying the process for securing building permits and making it easier for firms to trade across borders.

Georgia has a pro-business government and has reformed across the board Caralee McLeish Co-author Doing the Business

These reforms - and similar initiatives undertaken by Bulgaria - were motivated by a desire to meet the conditions for entry into the European Union by January, the report found.

"We have seen Eastern Europe reform aggressively in order to court entrepreneurs and investment," said Caralee McLeish, one of the report's co-authors.

"As for Georgia, the improvements have been quite astonishing. Georgia has a pro-business government and has reformed across the board."

Chinese credit

China also made progress, although it remains only the 93rd easiest country in which to do business.

In the past year, it has cut red tape, reduced the amount of time firms must wait to incorporate and set up a credit database providing information about consumer loans.

Improving business regulation was crucial to job creation, the World Bank said, stressing that many important reforms were simple to implement and did not require major legislative changes.

It also rejected criticism from trade unions that reducing regulation made workers more vulnerable.

"It is all about reducing the size of the informal economy, giving people the chance of getting jobs in the formal economy and reducing poverty," Ms McLeish added.

LEAST BUSINESS FRIENDLY COUNTRIES 175: Democratic Republic of Congo (175) 174: Timor-Leste (174) 173: Guinea-Bissau (173) 172: Chad (172) 171: Congo Republic (169) 170: Eritrea (168) Source: World Bank - Doing Business Report 2007 (2006 positions in brackets)

Africa has made up ground, after lagging behind other continents in previous years.

More than 65 sub-Saharan countries made progress in at least one area, while Ghana and Tanzania pushed through a series of reforms providing greater protection for firms and improving the tax system.

But Zimbabwe was censured for making it more difficult for firms to take on workers, while Eritrea was criticised for banning all private firms for bidding for construction work.

And in war-torn Democratic Republic of Congo, the worst country in which to start a company, it takes 155 days to register a business and costs six times the average annual income.

In Venezuela, where President Hugo Chavez's government has sought to expand the state's economic role, the report found it had become harder for firms to set up, obtain credit and register private property.