Bidzina Ivanishvili, whose Georgian Dream coalition will form a new government following election victory, met on October 5 with a large group of businesspeople from across a broad range of industries and vowed his government would provide equal conditions for all the businesses and would eradicate practice of pressuring businesses by the state.
He also told business leaders to immediately set off alarm bells if a government official exerts pressure on them.
“I guarantee that no one will dare to exert pressure on businesses and the very first case of such pressure will be strictly punished. But you too should not yield to [pressure] and you should speak out in order to make it easier for us to find out [circumstances]… Speak out and let us know if there is a problem so that we can react instantly,” he said.
Ivanishvili said that the government should stand “as far as possible” from business sector and should only get involved when it concerns legislation, tax system and infrastructure development.
“This cooperation should not be like it was [during the outgoing authorities]; the government should listen to business and address [business needs] through legislation and infrastructure [development]; it will be much better if the government is as far as possible from you; you should not need the authorities’ help; we have all seen what was their [present authorities’] 'help’ to us.”
“Government should be kept at distance from the business. You have to disturb the government if legislation is wrong, where infrastructure is needed, as well as in finding markets and providing guarantees; initiative should be coming from you and not vice versa,” he said.
“As soon as someone from the government starts trying to befriend you, you should start shouting out loud: ‘I’m raped’… and you should start ringing alarm bells as soon as someone from the government starts offering ‘help’,” Ivanishvili said.
Addressing the long-standing allegations about cartel-type price fixing in various sectors of the economy, such as import and retail of petroleum products, as well as on pharmaceutical market, Ivanishvili called on respective companies to tackle this issue “by yourselves” without the state interference. He said that “a very strict” anti-monopoly service would be established that would look into price-fixing schemes.
“Like I guarantee that not a single official will be able to meddle in your property illegally, I guarantee that we will set up a real anti-monopoly service to eradicate cartel price-fixing. You know that there are too many unrealistic prices on the market,” he said.
After one businessman, present at the meeting, complained about monopolization of import of medicines by large companies, founder of Aversi, one of the largest pharmaceutical companies in Georgia, Paata Kurtanidze, responded that access to import of medicines was not restricted. But Ivanishvili interrupted Kurtanidze and told him that was not the case and that even he could not import medicines when tried to do it for his hospital, built in his native town of Sachkhere.
Aversi is one of the three companies dominating in import, distribution, retail and manufacturing sector of Georgia’s pharmaceutical market, which has been described as “an oligopoly and vertical monopoly” by the Transparency International Georgia.
When asked if he planned to change current tax rates or to otherwise amend the tax system, Ivanishvili responded that at this point he had no specifics in this regard and added that in general the tax system “should be simple and comprehensible.”
When asked if he would consider scraping 15% profit tax, Ivanishvili responded that he did not know what the share of profit tax in budgetary revenues was; he said that his guess was that around 30-50 million was collected annually in profit tax and did not rule out possibility of scrapping this tax. But when he was told that annual budgetary revenues from profit tax were around GEL 600 million or even more, Ivanishvili reacted with a surprise: “GEL 600 million from profit tax? That’s unimaginable for me. This issue needs to be thought over and to be discussed; I can’t answer that question so simply.”
He also reiterated one of his pre-election promises to change the labor code so that to, as he says, restore balance in legal rights of employers and employees.
Chairman of International Chamber of Commerce, Fady Asly, told Ivanishvili that businesspeople had “mixed feelings”.
He said that on the one hand they were “very hopeful and very optimistic” because of seeing an opportunity for every business to operate on a level playing field, but on the other hand “they are very scared because they do not know what’s gonna happen tomorrow.”
“Frankly, we would not like to see the scenario of 2004 and 2005, Hollywood-style arrests of businesspeople happening once you are in power, because this will give a very bad message to the business community and to investors,” Asly told Ivanishvili. “But we are confident, because we already heard your comments that there will be no such things happening.”