For several years, the Georgian government, led by President Saakashvili, has placed anti-corruption efforts, together with economic reform, at the top of its political agenda. Since 2004, Georgia has seen tremendous progress in clamping-down on corruption and reinstating good governance. However, the country is still struggling with problems of high-level corruption and embezzlement.

Positive developments in relation to corruption and investment:

• Since 2003, several high-profile politicians and businesspeople have been arrested as part of the government's commitment to crack down on corruption. The anti-corruption drive that the Saakashvili government has been advocating has meant that cases of smuggling, tax evasion, bribery as well as abuse of power are being punished severely.
• Georgia has carried out many efforts to improve the country's business environment, including cutting the number and rates of taxes, improving tax and fiscal administration, streamlining licensing requirements, deregulating, and simplifying customs and border formalities. In addition, several surveys reveal that the demand for bribes has declined when companies interact with licensing, registry and tax authorities.
• Georgia has been widely praised for being able to cut back on red tape in relation to setting up and running a company. Starting a company in Georgia is now relatively simple.
• An Anti-Corruption Inter-Agency Council was set up in January 2009 to support and update the National Anti-Corruption Strategy. The Council will also implement recommendations by CSOs and international organisations.

Risks of corruption:

• The government’s anti-corruption efforts have mostly been centred on low and mid-level corruption rather than targeting high-level corruption. As a result, the country is still struggling with problems of high-level corruption and embezzlement.
• Companies should be aware that due to deficiencies in the court system, such as the questionable competence level and impartiality of court rulings in foreign-domestic disputes, companies are safer if they include in their contracts a provision for the international arbitration of disputes.
• There is some speculation about whether the current government's measures to curb corruption can be sustained after President Saakashvili's term is over. Saakashvili has focused on strengthening presidential powers rather than establishing and stabilising lasting institutional frameworks, an indication that the anti-corruption drive is closely linked to his personal popularity.