Paving Way to Georgian Post’s Monopoly
23 May, 2013
Paving Way to Georgian Post’s Monopoly
The last order of Ministry of Finances of Georgia paves way to establish Georgian Post as the monopolist at a carrier market. As Transparency International Georgia (TI Georgia) informed on May 8, 2013, Minister of Finance (MOF) signed an order abolishing MOF’s previous regulations issued in this January as an anti-smuggling remedy that caused serious problems to local small and medium sized carriers and placed the state-owned Georgian Post in an advantageous position. The trick is however that the new regulation
canceling the previous one enters into effect on January 1st, 2014 that means the hazardous regulation will be in force for 8 months that is more than enough to oust small and medium sized shipping companies off the market and insure monopolist position to Georgian Post.
The point is that the old order increased bureaucratic burden in customs clearance procedures as admitted carriers to implement customs clearance only if they are reputable and experienced, have own warehouse, managed to work out and install own special software system in 7 days for declaring cargos in electronic system, and organize timely payment of import duties and the service fee by the importer. Besides, MOF demanded to comply with the requirements in 6 days since issuance the order while only creation of the software system takes at least two weeks. However when Star Group, a small carrier, managed to submit the program in due timelines it took two months of MOF to test the program. Only Georgian Post turned out to be in full compliance with the said requirements and all other carriers had either use its service that jacked their expenses by around 25% up or stand still. Ultimately 10 carriers stopped activity facing bankruptcy. Two tried to find the truth through the court and asked for help TI Georgia. According to Tea Machavariani, founder of Star Group, Georgian Post implements cargo clearance non-transparently for it is not connected to the international customs network identifying and providing all possible data on the transported cargo. Georgian Post is geared to handle with post parcels alone. TI Georgia found MOF’s new regulations irrelevant, countering to Georgian legislation and putting Georgian Post in an advantageous position on expense of petty carriers. TI Georgia supported complaining carriers at court and appealed it to abolish the said regulations immediately. However, MOF requested a two week adjournment of the hearing and promised to amend the problematic order so as there would be no need to continue the dispute. The promised amendment turned out to be the new order abolishing the questioned regulation after 8 months that both TI Georgia and carriers perceive as no solution to the problem and insist on immediate annulment of the troublesome regulation.
“In eight months time private companies will be excluded from the market, while Georgian Post will maintain an advantageous position in the carrier business. At the same time, these local companies will suffer from serious financial problems and probably won’t have the chance to come back on market,” TI Georgia said.
“MOF is either inadequate or corrupted,” Machavariani told Georgian Journal. “I am already bankrupt thanks to MOF’s regulation that was enforced in 6 days and to abolish this regulation MOF needs 8 months.”
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