Stuck Between EU and Singapore
19 April, 2012
Stuck Between EU and Singapore

 

Georgia should opt between the EU and the much trumpeted Singapore economic model idealized by Georgian government. The Center for Economic Problems Research having delved in the issue, came to the conclusion that Singapore, unlike Georgia, has much more regulations including the competition policy restriction while Georgia swarms with monopolies and its competition regulation is still under discussions.

 

 

Singapore is the most favorite image set forth by Mikheil Saakashvili, the President of Georgia, as a dreamland for Georgian economy with the

most liberal economic platform expected to make Georgia an investors’ haunt ultimately. Chasing this idea, the liberally thinking Georgian government got rid of important regulations including quality and standard ones as well as anti-trust law leaving consumer exposed to monopoly and consumer rights infringement risks.

All was justified by adjusting to Singapore economic model largely believed to be regulation-free and therefore the paradise of investments. However as soon as Georgia undertook talks on the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU in 2008 it became clear the deal cannot come true unless Georgia will restore the denounced regulations including anti-trust. The anti-trust body was restored in 2011 although it cannot work effectively as the law is still under vision.

The Center for Economic Problems Research (CEPR) researched the regulation-free inclination of Georgian government based on comparison with other countries including the EU, post-soviet states and the much touted Singapore and came to conclusion that Georgia as a small country and small market should have stricter market regulation unlike big countries that enjoy preferences of big market that can regulate monopolies better than the small market with restricted potential.

Moreover, as Davit Narmania, Executive Director of the CEPR, explains in fact Singapore has much more regulated market than Georgia.

“The presumption that Singapore’s market is not regulated is wrong,” Narmania said. “There are much more restrictions in Singapore to this end. This country has due law unlike Georgia where monopolies are operating in any sector of economy. Government has been writing the law for two years and now Parliament is discussing the bill for 6 months.”

According to the CEPR research, Singapore is the second most liberal economy globe over after Hong-Kong. Its economic index in 2011 took 87.2 out of 100 scores. The GDP per capita amounts to USD 62100 and is number five in the world.   71.7% of the GDP is made of service and only 28.3 come on industry. The agriculture is not represented in the GDP in fact except of fishing. The Gini index [that measures the inequality among values of a frequency distribution for example levels of income in households] stood at 47.8% in 2009 that place Singapore number 28 globe over that is not a good position, Narmania said.

Media in Singapore is completely under the state control and its democracy level is number 82 in the world by 2010 data and nicknamed as “the hybrid regime” as far as several democracy evaluation components including the election process and pluralism, as well as political culture are low.

However 65 different ministries and councils regulate market in Singapore and as Nodar Khaduri, an economic analyst with the CEPR, assures the myth on Singaporean market’s complete openness and regulation-free character is quite provisional. Putting names of some regulatory bodies operating in Singapore bespeaks of this fact, he believes: Council of Architects, Casino Regulatory Agency, Coucil of Totalizators, Central Insurance Fund, Competition Commission, Council of Property Agencies, Economic Development Council, Hotel Licensing Council make the incomplete list of regulatory bodies there.

According to Narmania, 15 different bodes regulate different segments of market in Singapore. At any rate, Georgia is better to focus on the EU economic model as some economic analysts believe since it declares its priority is the EU integration and it is impossible to move toward the EU and practice Singapore sort of economy at the same time.

Moreover, some sector pundits think Georgia should understand its reality that it is a part of Europe and focus on the European way of economy.

As David Lee, President of the American Chamber of Commerce in Georgia said in his earlier interview with Georgian Journal, Singapore open economy model is good and lessons should be learnt of it, but there are fundamental differences between these two countries:  Georgia is much bigger than Singapore; also Georgia develops agriculture and is not an Asian country.

“So lessons should be learned but Georgia is a European country and its borders are essentially European if we consider the Black Sea to be a borders and I think the future for Georgia is in Europe because it’s where it is. And more importantly culture and people - it is a Christian European country and I see that inevitable,” he said. “You are European and there is no point in denying it or pretending you can become Singapore or like Arabs in the case of Dubai.   These models are very useful but Georgia should look at its history and be realistic, you are European and your future should be in the main part of this blog.”

According to Ambassador Konstantin Zaldastanishvili, Secretary General of EU-Georgia Business Council (EUGBC), it is impossible to follow two cardinally different development paths simultaneously. Since regaining independence, Georgian authorities have repeatedly declared integration in the EU as a major priority of the country’s foreign policy.

“The fact that today Georgia starts negotiations with EU on DCFTA is once again indication of Georgian authority’s clear choice. It is noteworthy that the negotiation process implies asserting certain obligations and accepting the European “rules of the game”. I think that Georgian authorities acknowledge this very well,” he said in his earlier interview with GJ.

 

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